Budget Notes

BN105 RESIDENCE AND DOMICILE: REMITTANCE BASIS AND ART FOR PUBLIC DISPLAY

Who is likely to be affected?

1. UK individuals claiming the remittance basis of taxation.

General description of the measure

2. Legislation will be introduced in Finance Bill 2008 to exempt works of art from being taxed under the remittance basis if they are brought into the UK for public display.

Operative date

3. This change will have effect on and after 6 April 2008.

Current law and proposed revisions

4. Currently, a work of art which has been purchased offshore from unremitted untaxed relevant foreign income is not taxed under the remittance basis when it is brought into the UK. A work of art purchased offshore from unremitted untaxed employment income or capital gains is currently taxable under the remittance basis when brought into the UK.

5. Legislation will be introduced in Finance Bill 2008 to introduce a new scheme that will allow works of art, purchased overseas from unremitted untaxed employment income, capital gains or relevant foreign income, to be brought into the UK for public display without giving rise to an income tax or capital gains tax charge under the remittance basis.

6. This new scheme will be based on the existing HM Revenue & Customs schemes for VAT and import duty (temporary imports and items brought into the UK permanently by museums and galleries). It will allow for works of art to be imported either indefinitely or temporarily without giving rise to a charge to tax on the remittance basis so long as that work of art is on public display in an approved establishment. Works of art not on display, but held by approved establishments for the public to see or for educational purposes, will also be covered by the scheme.

7. This exemption for art is in addition to any exemptions which have effect for assets more generally.

Further advice

8. If you have any questions about this change, please email offshorepersonal.taxteam@hmrc.gsi.gov.uk or telephone 020 7147 2762. Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk