Welcome to the March 2023 issue of our international e-bulletin for private client, family office and trustee clients and contacts. It has been a busy six months with a lot happening in the legal world as well as at Wedlake Bell. Below I give a round-up of some of the latest topical developments relevant to the UK-linked international private client community, along with some recent “Wedlake Bell news”.
Spring Budget 2023
The UK government has just published its Spring Budget 2023. This did not contain any unwelcome surprises for private client practitioners in terms of the headline rates of capital gains tax (“CGT“), inheritance tax (“IHT“) or income tax, which will all remain (along with their related allowances) as announced in the Autumn Statement on 17 November 2022. The Autumn Statement saw effective tax rises across all these taxes in response to unprecedented levels of public debt, as well as following the market turmoil caused by the controversial “mini Budget” under the Liz Truss administration.
One of the main (and welcome) surprises of the Spring Budget was the announcement of the abolition of the pension lifetime allowance (currently £1,073,100). This should have a positive impact for many clients in terms of their IHT planning.
Other Spring Budget announcements of interest to international private clients include the following.
- UK resident investment managers will, from 6 April 2023, be able to make an election to accelerate their tax liabilities in respect of carried interest in order to align their timing with the position in other jurisdictions for double taxation treaty purposes.
- The government will widen the “genuine diversity of ownership” condition for the purposes of the application of the non-resident CGT rules in respect of collective investment vehicles.
- Minor amendments will be made to the draft “share for share exchange” rules originally announced in the Autumn Statement 2022. These rules relate to shares or securities in a non-UK company that are acquired in exchange for securities in a UK close company, deeming them to be located in the UK for CGT purposes.
- Minor reforms will be introduced to the UK’s automatic exchange of information legislation including in connection with the implementation in the UK of the OECD’s Mandatory Disclosure Rules from 28 March 2023.
Further information on these points, as well as other announcements of interest in the Spring Budget, is included in our summary here: Spring Budget 2023 – Private Client Announcements – Wedlake Bell.
Register of Overseas Entities
Following the enactment of the public register of beneficial ownership of non-UK entities holding UK land (the “Register of Overseas Entities“) with effect from 1 August 2022, the transitional registration period given to affected pre-existing entities ended on 31 January 2023. As from this date, affected entities that have not yet completed their registration could be subject to enforcement action in terms of financial penalties and potential criminal liability. A large part of our work as a team over the past six months has been assisting clients with analysing whether an overseas entity needs to be registered under the rules, acting as verification agent and dealing with registrations where necessary.
In our last issue “The Register of Overseas Entities and the Verification Conundrum” we highlighted some of the challenges associated with relevant information needing to be independently verified. Since then, certain aspects of the verification process have been amended pursuant to the Register of Overseas Entities (Verification and Provision of Information) (Amendment) Regulations 2022 which came into force on 12 January 2023.
A concern that continues to be highly relevant to many high-net worth individuals is the risk to privacy, and in some cases safety, that public disclosure of their connection with the relevant UK property (via the overseas entity) or relevant personal information poses. We discuss this in further detail in the article “My Home Is My Castle: Protection of Privacy in the Age of Transparency“.
Wedlake Bell news
We are delighted to announce the expansion of Wedlake Bell’s art and luxury law practice with the recent addition of Rudy Capildeo and Tim Maxwell as the firm’s new Co-Heads of Art & Luxury. Also joining Wedlake Bell is specialist in the Art & Luxury space Petra Warrington (senior associate).
The Art & Luxury team sit within the firm’s broader private wealth offering and advise clients ranging from artists, private collectors and international art galleries through to collector car dealers, fine wine and yacht financiers, and private equity backed musical instrument funds. They have recently acted on some of the most ground-breaking cases relating to artists’ rights and high-value title disputes, worked with philanthropists to help save collections for the nation, secured access to government tax relief schemes for families’ heritage assets and helped clients to achieve world-record auction results.
Separately, a mixed group of Private Client (Camilla Wallace, Antoaneta Proctor, Clare Armitage and Kate Johnson), Residential Property (Tom Allfree) and Art & Luxury (Tim Maxwell and Rudy Capildeo) partners has recently returned from our semi-annual Middle East trip to, on this occasion, Riyadh, Jeddah and Dubai. There we continue to witness the impressive pace of change that is happening in the Kingdom of Saudi Arabia, bolstered by the government’s drive to create legislative frameworks around key sectors of the future, whilst drawing on best-practice international expertise. As for Dubai, the buzz surrounding ambitious real estate and other projects is attracting new entrepreneurial capital, in turn triggering personal relocations and the need to revisit tax, succession, wealth structuring and governance options. Being closer to our clients and listening to their concerns allows us to be part of their individual journeys.