Tag Archive: private client

1. Private client update UK Budget 2024

   10 March 2024 10:40 am Leave a Comment

   Private client update UK Budget 2024 – Introduction

   Wednesday’s budget announcement held few surprises due to prior leaks, but it did bring unexpected changes for private clients, notably a substantial overhaul of the “non-dom” tax regime and a reduction in capital gains tax (CGT) for certain residential property sales.

   Here’s a breakdown of the key points…

   National Insurance Contributions (NICs)

   The government announced a further 2p reduction in the main rates of NICs for employees and the self-employed, starting 6 April 2024.

   This cut, following reductions made in the 2023 Autumn Statement, lowers Class 1 employee NICs from 10% to 8%, and the main rate of Class 4 self-employed NICs to 6%.

   Additionally, the government plans to abolish Class 2 NICs.

   Reforming the “Non-Dom” Tax Regime

   In a move more drastic than anticipated, the Chancellor plans to replace the current “remittance basis” of taxation for non-UK domiciled individuals with an “exemption regime” based on residence from April 2025. U

   Under the new system, non-doms non-tax resident for the last ten years will enjoy a four-year exemption from UK tax on foreign income and gains, after which they’ll be taxed like other UK residents.

   Transitional Arrangements for Non-Doms

   Transitional measures will allow existing non-doms using the remittance basis to rebase the value of capital assets to April 5, 2019, figures.

   They’ll also benefit from a temporary 50% exemption for foreign income taxation in the first year of the new regime and a two-year “temporary repatriation facility” to bring foreign income and gains into the UK at a reduced tax rate.

   Inheritance Tax (IHT)

   Despite speculation, there were no changes to IHT announced.

   The government did mention a move to a residence-based regime for IHT and will consult on the best approach, with no changes expected before 6 April  2025.

   Capital Gains Tax (CGT)

   Unexpectedly, the Chancellor announced a reduction in CGT on residential property sales from 28% to 24% starting April 6, 2024.

   This aims to incentivize the sale of second homes and rental properties, potentially increasing housing availability.

   Property Taxes

   The abolition of both the “furnished holiday lettings” tax regime and the SDLT “multiple dwellings relief” were announced as measures to make the property tax system fairer and more efficient.

   The FHL regime will be removed from April 2025, and the MDR abolition will be effective from June 1, 2024, with certain grandfathering provisions.

   Private client update following UK Budget 2024 – Looking Ahead

   With a general election on the horizon, the focus shifts to the potential response and policies of the Labour party, especially regarding the proposed non-dom tax changes set for April 2025.

   Preparing for possible legislative changes after the election is crucial for those who may be impacted by tax increases.

   Seeking professional advice now can provide clarity and prepare individuals for any future tax changes.

   Final thoughts

   If you have any queries regarding this article on ‘Private client update following UK Budget 2024’, or UK tax matters generally, then please get in touch.

    

2. Hungary Private Client Tax Matters

   2 July 2023 9:51 am Leave a Comment

   Hungary Private Client Tax – Introduction

    

   As Hungary continues its journey towards modernization, private clients must grapple with intricate tax considerations outlined in the Act of CXVII of 1995 on Personal Income Tax.

    

   This is the main legislation dealing with personal income tax.

    

   Hungary Tax Residence

    

   Like in many jurisdictions, determining tax residency in Hungary involves some care. 

    

   The following are likely to be resident for tax purposes in Hungary:

    

   • Hungarian citizens, 
   • EEA nationals spending at least 183 days in Hungary, and 
   • Third-country nationals with specific residence statuses fall under Hungarian tax residency. 

    

   The definition extends to individuals with a permanent home, vital interests, or habitual abode in Hungary.

    

   Hungarian tax residents are globally taxed, contrasting with non-residents taxed solely on income from Hungarian sources.

    

   Hungarian Personal Income Tax (“PIT”) and Passive Income

    

   Interest Income

    

   Hungarian-resident individuals face a 15% PIT rate on worldwide interest income. 

    

   PIT covers various scenarios, including publicly offered debt securities, where capital gains are deemed interest income.

    

   To eliminate double taxation, Hungary provides tax credits or follows relevant double tax treaty rules. 

    

   Notably, interest income received in valuable assets triggers tax based on fair market value if withholding isn’t feasible.

   Dividend Income

    

   Dividend income for Hungarian-resident private individuals is subject to a 15% PIT rate, along with a 13% social tax in 2023. 

    

   Distribution from entities in low-tax jurisdictions attracts additional taxes.

   Capital Gains

    

   Capital gains, including those from the sale of shares, are subject to a 15% PIT rate and a 13% social tax in 2023. 

    

   Preferential PIT rules may apply to controlled capital market transactions.

   Qualified Long-Term Investments

    

   Favorable tax treatment applies to qualified long-term investments, potentially leading to a zero percent tax rate after five years.

   Inheritance and Gift Tax

    

   Hungary imposes an 18% tax rate on the net value of inherited or gifted properties. 

    

   Residential properties benefit from a preferential 9% rate. 

    

   Several exemptions exist, such as lineal relatives being exempt from tax, and exemptions for scientific, artistic, or educational purposes.

   Transfer Tax

    

   Transfer tax applies to real estate, movable property, rights of pecuniary value, and securities acquired through inheritance. 

    

   Shares in real estate holding companies may also incur real estate transfer tax.

   Property Taxes

   Building Tax

    

   Local municipalities may levy building tax, capped at 1,100 forints per square meter or 3.6% of the adjusted fair market value.

    

   Land Tax

    

   Land tax, imposed annually or based on adjusted fair market value, allows municipalities to charge up to 200 forints per square meter or a maximum of 3%.

    

   Hungary Private Client Tax – Conclusion

    

   Like their equivalents in other jurisdictions, private clients navigating Hungary’s tax landscape face a myriad of considerations. 

    

   Hopefully, our high level article underscores the importance of understanding the nuances to ensure compliance and optimize tax outcomes in this dynamic environment.

    

   If you have any queries about this article on Hungary Private Client Tax Matters, or Hungarian tax matters in general, then please get in touch.