Author Archives: Janet Pilborough-Skinner - Partner

About Janet Pilborough-Skinner - Partner

T +44 (0)20 7874 8854

Janet specialises in advising entrepreneurs and business owners on their personal tax. Her expertise in onshore and offshore personal taxation planning is relevant to both those in UK and those who come to us looking to establish a business or a home in the UK.

She has particular experience with family businesses where she advises on succession and inheritance tax planning.

She also advises non-domiciled clients on offshore structures, domicile and residence planning and trusts.

As all of us start to think more about the future and less about the day-to-day in these strange times, what could be ahead for us as individuals?

Most commentators agree that the government’s focus in the short-term should be to stimulate the economy; what about the long-term need to cut the Budget deficit? As we know, there are really only two ways of doing that, by reducing spending or increasing taxes.

So, what could affect private individuals, both in the UK and abroad, who may be watching what the UK does with interest? Early indications are that people still want to remain in, come to or invest in the UK, but other countries are getting their act together and in this new world, the UK may find it has to work harder to attract and keep wealthy investors and entrepreneurs both in and outside of the UK.

Short-term Stimuli

Some stimulus methods which would directly affect private individuals could be exemptions or reductions in Stamp Duty Land Tax; a reduction in VAT, perhaps only for certain sectors; and fresh/revamped tax incentives aimed at start-ups. Any of these are likely to only be temporary to kickstart the economy.

Balancing the Books

Turning to the longer-term, raising taxes appears to be the most likely option, particularly as the public appear to be somewhat resigned to this; they do not want services cut further.

Income Taxes

The difficulty here lies in public perception; raising the higher and possibly the additional rates of tax by 1% will raise a fraction of the extra revenue needed compared to raising the basic rate of tax by 1%. This would suggest therefore that any increase in income tax rates should be across the board, rather than targeted at one section of society.

Another possibility is aligning the dividend rates of tax with the income tax rates. Removing this differential would probably be seen to be fair in the current climate.

It would also be possible to introduce a withholding tax on dividends paid to non-residents receiving UK dividends which are currently outside the scope of UK tax. This may not bring much additional tax into the UK as the withholding tax would be relieved in many cases under the UK’s extensive double-tax treaties with other countries, but politically it may be attractive.

Capital Gains Tax

Capital taxes in the UK account for a fraction of the overall tax take and changes in the capital gains tax rate are widely expected. The current rates for higher rate taxpayers of 20% (most disposals) and 28% (mainly residential property) could be standardised to 28% across all disposals or at least a higher flat rate. It would also be relatively easy to align the rates with income tax rates or perhaps penalise UK resident non-domiciled individuals with standard income tax rates on their capital disposals.

New Taxes?

This article focusses on private clients rather than corporate entities, so the usual rumours of introducing a wealth tax in addition to inheritance tax are already resurfacing, especially as over the years many countries have abolished their version of inheritance tax and brought in a wealth tax. However, the cost of administrating such a tax would seriously outweigh the overall tax-take and although this rumour may be popular with the public, for that reason it is unlikely to gain further traction.

Cutting Reliefs

The other side of the coin is to consider restricting or withdrawing certain reliefs. This may be the final nail in the coffin for certain capital gains tax and inheritance tax reliefs which tend to disproportionately benefit the wealthy. In this category could be the inheritance tax relief for business property which could increase the inheritance tax-take by a substantial amount should the government feel able to make such a bold move.

Steps to consider before the Autumn

Crystal ball gazing can never be more than someone’s opinion on what might happen, but experience shows that during a recession individuals tend to want to regularise their affairs, and the pandemic has given people more time to consider their personal position.

• Think about your short, medium, and long-term plans for you and your family
• Take time to evaluate the areas which need attention now
• Consider taking dividends where appropriate
• Consider taking distributions from trusts
• Check assets held with inherent gains
• Actively look at lifetime giving

All the above bullet-points have tax implications and advice should be sought before implementation. Goodman Jones’ Private Client team are well versed in helping you make the right decisions at the right time.

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A case reported in the Financial Times recently highlighted the importance of having a current and up-to-date will. The story was that of an elderly couple who were found dead in their home, leaving their two daughters (step-sisters) to debate which of them should inherit the house.

An elderly couple walking. Making sure they have an up-to-date will.

The situation was complicated by two factors: that the mother’s will made no provision for her step-daughter, and that the father had not left a will at all. Who inherited the estate would depend on which of the couple had died first. If the husband had died first, his share of the property would go to his wife. The wife’s daughter would then be the sole beneficiary of the estate when her mother died, as per her mother’s will.

If the wife had died first, the property would be passed on to her husband, whose death would result in his daughter inheriting the estate, and not his step-daughter, as under the rules of intestacy.

As it was impossible to determine which of the couple had died first, the Court had to find a way to settle the step-sisters’ dispute. In order to do so, the Law of Property Act 1925 was applied. This stated that the elder of the two, in this case the husband, was deemed to have died first. As this was the case, the property last belonged to the wife, and thus the wife’s daughter inherited the entire estate, to the exclusion of her step-sister. This may not have been what either of the parents intended and was a costly way of resolving the issue.

This case emphasises the importance of having an up-to-date will that leaves precise instruction for the division of assets. This helps both for inheritance tax planning purposes as well as to avoid the kinds of family disputes highlighted here.

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For most family firms, the business isn’t the endgame. Their owners aren’t typically in business for business’s sake; their aim is to create wealth for their families.

As such, the job of a family business adviser (FBA) is to help the family – not just the business – to get to where they want to be.

An FBA’s ‘client’ is the family as a whole, the family members as individuals, the business and its owners, all at the same time. Their job is to listen to the concerns of the people involved, and work with them to find solutions that everyone can buy into.

The family business advisory process

We believe that the most effective way of working with an FBA is to begin with an in-depth kick-off session.

At Goodman Jones, this entails a long and detailed discussion about the family, and about the history of the business from inception to the present.

Using this information, and their knowledge and experience of how family businesses operate, our skilled Family Business Advisers will identify any vulnerabilities or potential flashpoints in the company-family ecosystem. They do this by analysing:

• each family member’s role within the company
• each individual’s age and stage in life
• the personal dynamics between the family

Our FBAs will also know who to they need to engage with to resolve any issues – internally within the company, as well as any other external advisers.

This powerful exercise provides a template for how things are, and how to deal with future challenges. And it can open the family’s eyes to issues they didn’t know they were facing.

The benefits of a family business adviser

Having gained a deep understanding of the family and the company, our FBAs will help implement the appropriate solutions, such as governance structures, refinancing, succession, tax planning, and so on.

They’ll also work with the owners to address any issues that may emerge. Our advisers have helped hundreds of family businesses to address a wide range of common challenges, including:

• How can retiring generations fund the next stage of their lives – and will that affect the family members left in the business?

• Are the next generation ready to take over, or would it be beneficial to the business for their parents to make a more gradual exit?

• Should outsiders be brought in to help run the business for a period? If so, how will the family adjust to their business no longer being family-run?

Crucially, they can be a neutral mediator between family members. They’re there to help you reach any compromises that are needed to help meet your shared objectives; and to ensure that the arrangements put in place meet everybody’s expectations.

Ultimately, this is where our Family Business Advisers truly add value for our clients: by acting as a sounding board, a guide, a negotiator, a problem-solver, a bridge between the generations – and most of all, someone who tells it like it is.

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The statistics that HMRC published for the tax year to April 2016 show that individuals claiming non-dom status paid a record £9.4bn. This is an increase of £130m on the previous year and the highest total since the records began ten years ago.
This is despite the fact that the numbers of individuals claiming non-dom status had dropped by almost 25% to just over 91,000.

Challenging Perceptions

This data shows that the average tax bill is £100,000. It certainly challenges the widely held belief that the UK has huge numbers of non-doms who are not paying their fair share of tax.

So who stopped claiming non dom status?

HMRC traced the 29,000 taxpayers who stopped claiming non-dom status and said that they could be classified into two main groups.

• Those switching their position to domiciled status and continuing to pay tax in the UK
• Those who contributed very little tax in 2015/16 who left the tax system last year. HMRC also provided the statistics for non-UK resident non-doms where the numbers have plummeted from 33,600 to 14,300.

Remittance Basis

Those paying on the remittance basis (where UK tax in only paid on the income or gains brought to the UK) paid nearly £7m which is also the highest figure since records began.

The total paid in charges rose to £285m, again the largest amount raised since its introduction.

Where in the UK?

53% of non-doms were in London and paid 74% of all non-domiciled taxpayers UK income tax, CGT and NI contributions.

Business Investment Relief

At £894m, this was the highest annual amount invested in the UK using the Business Investment Relief.

Making the most of the UK for non-doms

This report suggests that non-doms are certainly paying their fair share to the UK Treasury and making a real contribution to the UK. This is despite other European neighbours encouraging non-doms with their own non-dom regimes.

We are used to working with non-doms to ensure that they maximise their position and make it easier to stay, educate their children and enjoy all the UK has to offer.

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The UK tax system can be both daunting and frustrating. There is much to deal with when relocating, but ignoring your personal tax position can be costly.

Over the years Goodman Jones has worked with many people coming to the UK. This guide gives an overview of some of the concepts that may be relevant to you and your family and suggests some tax planning opportunities that you may wish to explore further.

UK domestic rules

Your tax position in the UK is determined by two different concepts:
• Residence
• Domicile


Your residence will be determined by a series of tests, known collectively as the statutory residence test. This comes in 3 parts:

• Automatic UK tests
• Automatic overseas tests
• Sufficient ties tests

If you meet at least one of the UK tests and none of the overseas tests, then you will be UK resident. For example, if you spend 183 days or more in the UK (defined as being in the UK at midnight), then you will be UK resident. The automatic tests are applied in a specific order, so care must be taken.

If none of the automatic tests are met, then the sufficient ties tests provide a tie-breaker to determine residence. These look at the number of ties you have to the UK, for example whether you have accommodation available to you, or close family members who are UK resident. The number of ties then dictates how many days you can spend in the UK until you are considered UK resident.

Whether you are UK resident or not is of crucial importance when it comes to your UK tax position. It can be complex to work through the statutory residence test, so obtaining advice is recommended.

Whether you are UK resident or not is of crucial importance when it comes to your UK tax position


Domicile is a concept of general law and is determined in a different way to residence.

Domicile of origin: An individual acquires a domicile of origin from their father at birth.

Domicile of choice: An individual can acquire a domicile of choice by settling in another country permanently and severing ties with the country of origin. It is difficult to establish a domicile of choice and very easy to unintentionally revert back to a domicile of origin.

Deemed domicile

Although domicile is a general law concept, it has been augmented by the tax law concept of deemed domicile. This applies to income tax, capital gains tax (CGT) and inheritance tax (IHT), and comes in two different forms:

Long term resident: An individual becomes deemed domiciled in the tax year after being UK resident for at least 15 of the previous 20 tax years. Note that you can be deemed domiciled even if not UK resident.

Formerly domiciled resident: An individual becomes deemed domiciled if they were born in the UK with a UK domicile of origin, and are resident in the UK for that tax year and in at least one of the two preceding tax years.

Basis of taxation in the UK

Once you have established your tax status you then need to understand how you will be taxed in the UK. Spouses are taxed independently.

Non-UK resident

Non-UK residents are in general liable to UK income tax only on UK source income, and if you are also taxed on this in another country you should be able to claim double tax relief. Non-UK resident individuals are not liable to UK capital gains tax with some exceptions, notably UK residential property. Domicile is generally not relevant to non-residents.

This limited liability to UK tax for non-residents means that timing of entry to the UK should be considered. Remaining non-UK resident as long as possible may be advantageous, especially given the UK’s unusual tax year end of 5 April.

You may benefit by setting up a three bank account system before you come to the UK.

UK resident

In general, UK resident individuals are liable to UK income tax and CGT on their worldwide income and gains, known as the “arising basis”.

However, non-UK domiciled individuals can claim to use the “remittance basis”. You will still be liable to income tax and CGT on your UK income as this arises, but you will generally only be taxed on your foreign income and gains if they are remitted (brought) into the UK. However, what counts as a remittance is widely defined and advice should be sought.

Once you have been resident in the UK for 7 of 9 years you must pay an annual charge of £30,000 to use the remittance basis. This charge increases to £50,000 once you have been UK resident for 12 of 14 years. Use of the remittance basis is no longer available once you become deemed domiciled.

Bringing money to the UK

If you are non-domiciled you may incur a tax charge by bringing money into the UK that relates to income or gains which arose in the years in which you claimed the remittance basis. Money which arose before you become UK resident is known as “clean capital” and it generally will not incur a tax charge when remitted to the UK.

However, it is easy to taint clean capital, creating a “mixed fund”, and inadvertently incur a tax charge on bringing it to the UK. It is therefore important to segregate clean capital from other monies since becoming UK resident. You may benefit by setting up a three bank account system before you come to the UK – one for existing capital, another for income and a third for proceeds from capital disposals.

A common way for clean capital to become tainted is for an asset, which was purchased with clean capital, to be sold at a gain. This gain cannot be separated from the capital used to purchase the asset, therefore tainting the original capital. If the sale proceeds are brought into the UK, the gain is deemed to be remitted first therefore creating a tax charge.

It can therefore be advisable to dispose of assets which are standing at a gain before becoming UK resident in order avoid creating a mixed fund. The entire sale proceeds can then be remitted to the UK without a charge to UK tax. If you are already UK resident, there is an opportunity (until April 2019) to “cleanse” mixed funds and separate out income and gains from clean capital. Again, advice is strongly recommended.

Tax rates and allowances

Income tax

There are three tax rate bands, being a basic rate of 20%, a higher rate of 40% and an additional rate of 45% for those with income exceeding £150,000 in the 2017/18 tax year. There are slightly lower rates for dividends.

UK resident individuals are entitled to income tax allowances, which reduce your taxable income but are restricted in certain circumstances, such as claiming the remittance basis.

Capital gains tax

The rate of CGT is generally 20%, with a higher rate of 28% applying to UK residential property.

There is also an annual tax-free allowance which applies to capital gains realised. For 2017/18 it amounts to £11,300. However, this is lost for remittance basis users.

Tax registration in the UK

Although there are no specific tax forms for complete when you arrive in the UK, you will need to register to obtain a National Insurance number if you intend to work and also register if you need to complete a UK tax return.


Dispose of assets which are standing at a gain before becoming UK resident in order avoid creating a mixed fund.

Social security – National Insurance (“NI”) contributions

Broadly, people working in the UK make NI contributions to pay for certain state benefits, including the state pension, until they reach their normal retirement age. The top rate of NI for individuals is 12%. Employers make NI contributions at 13.8%.

If you are employed then your employer should collect your contributions from your salary. If you are self-employed then you pay your contributions through your tax return.

So that any contributions you make are allocated to you, you need a National Insurance number. This may have been allocated to you on application for a residence permit, but if not, you will need to obtain one by contacting Jobcentre Plus and setting up an appointment at one of their offices.

If you have been sent to the UK by your employer your position may be slightly different – you may be able to continue to pay social security contributions in your home country. This area can be quite complex and we would recommend you seek further advice.

UK tax return requirements

In the UK you are required to self-assess your tax liabilities. If you need to complete a UK tax return (e.g. because you are a director of a UK company, you want to claim the remittance basis or you have further tax to pay in the UK) you must complete form SA1 from HMRC.

The UK authorities have considered the practice of dual contracts to be suspect.

Income from employment

If you are taking up employment in the UK, either for a UK or an overseas employer, you should obtain advice on how you will be taxed in the UK, how the provision of any non-cash benefits may be taxed and whether you can claim any exemptions from income tax on your remuneration package because you are coming to the UK for a temporary secondment.

If you undertake employment duties in the UK and overseas, it is common to have different contracts of employment so that you can keep overseas income out of the UK tax regime. However, the UK authorities have considered the practice of dual contracts to be suspect and have tightened up the law relating to them in the past few years, so advice must be sought in this area. There is an alternative relief for the first three years of UK residency for single contracts.

Estate planning and inheritance tax (IHT)

IHT is payable on the value of your estate when you die and on certain gifts made during lifetime. Unless you are either actually or deemed domiciled in the UK it is only your UK sited assets that will be liable to IHT (broadly at 40%).

There are a number of planning techniques which may be available to you to mitigate your exposure to IHT and we would be happy to discuss these with you.

Buying your home in the UK

Historically, UK residential properties have been acquired through non-UK trusts or companies so that the UK home becomes a non-UK asset and does not form part of the UK estate chargeable to IHT. However, such planning is no longer effective for UK residential property and as such other alternatives should be considered depending on your personal circumstances.

Should you use an offshore trust/company for other assets?

Assets settled on offshore trusts may give you further flexibility to manage your assets overseas and determine when and if you may become liable to any CGT or IHT. Substantial anti-avoidance legislation has been developed over the years so you should seek specific advice before undertaking any planning.

Questions to ask yourself before relocating to the UK

  1. Have you determined your tax status in the UK? Will you be resident/domiciled in the UK
  2. Would you benefit from making a remittance basis claim? Should you consider structuring your offshore investments differently to mitigate any taxable remittances to the UK so that you can retain your personal allowances? Do you need to re-organise your bank accounts before coming to the UK?
  3. Will you be working whilst you are in the UK? Do you have a National Insurance number, or will you need to obtain one?
  4. Do you need advice on your National Insurance (social security) position?
  5. Will you need to complete UK tax returns? Have you registered with HMRC?
  6. Are you taking up employment in the UK? Have you sought advice on your UK tax position and how best to structure your remuneration package? Should you re- negotiate your employment contract?
  7. Are you intending to purchase a residential property in the UK? Have you considered how to structure this investment?
  8. Should you consider re-structuring your investments to ensure that you retain greater flexibility over your assets and their exposure to UK tax?
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Following the uncertainty surrounding the proposed changes to the Non-Dom rules, we welcome this morning’s announcement that all policies originally announced to start from April 2017, will be effective from that date.

Ministers also confirmed this morning that the Finance Bill will be introduced as soon as possible after the summer recess.

There had been concern that the Finance Bill would have been pushed back to the autumn which would have prejudiced those who had incurred substantial amounts of time and money to organise their affairs in anticipation of the rules coming into force on 6 April 2017, especially if further changes had been made prior to enactment.

Whilst this is welcome news for those who had worked to the April 2017 date who can continue with their plans, there may well be others who should seek expert advice.  However, we would always recommend waiting for the bill to receive Royal Assent before implementing those plans.

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It has been announced that a significant number of proposals have been dropped from the Finance Bill having only four hours in the Commons this afternoon for debate before the Bill passes through later today.

All of the non-domiciled changes are amongst those dropped today but the expectation is that if the Conservatives are returned to Parliament, they will be reintroduced in a Bill post election.  Furthermore, it is likely the 6 April 2017 start date could remain for the non-domiciled changes, as those individuals and trusts affected by it have been aware of these proposed changes for a very long time.  Some of the other proposals (which were only introduced in the recent Budget) may well be delayed until 6 April 2018.

Watch this space.


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Piggy bank being filled at the seaside

The ‘Panama Papers’ created a media frenzy about offshore investment. Not everything you read was necessarily accurate.
Now that the dust has settled and the media have moved on to pastures new (for now), what can the leak of 11.5 million documents from a law firm in Panama mean in the longer term? The fact that there were links to various famous faces gave the story lasting appeal, but unfortunately that also meant more opportunity for misinformation and outright error.
One trap that too many commentators (and a few politicians) fell into was to equate all offshore investment with tax avoidance (or evasion) by the wealthy. While it is almost certainly probable that some names on the Panamanian list had this in mind, offshore investment has a much wider and often less tax-driven appeal.

Exchange Traded Funds

For example, one of the biggest areas of fund growth in recent years has been index-tracking exchange traded funds (ETFs). These are used by both institutional and individual investors to gain exposure to a wide range of share and bond markets, as well as some commodities, such as gold. Many of the ETFs purchased by UK investors are based in the offshore centres of Dublin or Luxembourg. These locations were originally chosen because they were established centres for fund management and offered administrative and other advantages for continent-wide sales over, for example, setting up in the UK.
This is only one example of a type of investment which has been placed outside the UK for commercial and sound business reasons. Before we leap onto the bandwagon to condemn every investor who has used a structure which may have an offshore element to it, it may be sensible to check our own investments in this current climate (however small) to ensure that there is nothing which may surprise us.  For example, do you know how your pension fund or stocks and shares ISA are invested?  Both of these commonly use ETFs and other offshore bond wrappers.

Benefits of Offshore

Offshore trusts and foundations are not used solely for tax reasons; usually the main reason for using a trust is asset protection for and from the beneficiaries.  The UK tax rules are continuing to be strengthened in this area under pressure from outside perception but why are offshore trusts and foundations continuing to be used and set up?  Interestingly, if you compare the offshore regulation  for trusts and foundations in many perceived “tax havens” (such as the Channel Islands), to the regulation for UK trusts, it is surprising to note that in the UK there are fewer requirements to file or keep records such as trust accounts.  So, for the parties to the trust there could be a benefit for them as well as better transparency, for the trust to be based offshore under a properly regulated regime.
In conclusion, the “takeaway” is not to stick with your first thoughts.  Test them, adjust them if necessary and ultimately your opinions will be yours and not influenced too much by outside factors.

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If your income is in excess of £100,000 you will already pay tax at higher rates. Pension contributions are often used to reduce the impact of these higher rates. The allowance for pension contributions is being reduced from 6 April so, if you want to avoid income in excess of £100,000 or maximise your pension savings before the contribution restrictions begin on 6 April 2016, you are running out of time to act.

The annual allowance determines the amount of pension saving an individual can make each year. For most individuals it is £40,000.  It is possible to carry forward unused allowance from the previous three tax years to offset any excess in the current year and can lead to generous pension capacity.

From 6 April 2016 the annual allowance is to be tapered down to £10,000 for certain “high earners”, but calculating who is affected is not straight forward.

Broadly, if your total income (and that includes unearned as well as earned income) exceeds £110,000, you have to then calculate your “adjusted income” by adding in the value of your pension contributions (including employer contributions).  If your total income then exceeds £150,000 then the taper will start to apply and will restrict contributions you can make.

The benefit of reviewing your pension position promptly cannot be overstated, since this short period may be the last opportunity to either avoid income in excess of £100,000 in the current tax year or make a substantial pension contribution before the future restrictions start. In order to further consider this one off possibility please contact Graeme Blair, Tax Partner, at or your usual Goodman Jones contact.

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HM Revenue and Customs have made a quiet announcement in a few paragraphs to remove the draconian retrospective effect that the original notice gave in 2014 regarding loans remitted to the UK where they have used overseas assets as collateral.

Although HMRC gave until 5 April 2016 to unwind or replace this borrowing, it was seen as unfair to penalise individuals who had followed HMRC’s stance at the time and had, in good faith, followed their interpretation and organised their affairs accordingly.

HMRC’s announcement in August 2014, changed their interpretation of the legislation and, as mentioned previously, the only transitional relief for those who had already taken out such a loan was a long period of time to unwind or replace the arrangement.

Common sense has prevailed and the representations that have been going on for some time have finally borne fruit and the announcement last week has stated that anyone whose loan was brought to or used in the UK before 4 August 2014 will not need to be repay or replace that loan.  Note, it is the date the loan proceeds were brought to/used in the UK, not the date the loan was taken out that is relevant for these purposes.

Any loan proceeds brought to/used in the UK after 3 August 2014 will still fall within HMRC’s change of practice and anyone unsure how they may be affected by these changes should take advice to check their position.

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