base rate rise

Tax shakeup: Encouraging foreign investment would boost UK economy

The tax system for international investors and non-domiciled residents in the UK can be complicated. Experts are calling for a reform to kick-start the economy.

HMRC should reassess how it treats investors from overseas to encourage more inward investment. This is the advice of Robert Pullen, a partner at tax and advisory firm Blick Rothenburg.

As the fight to control coronavirus in the UK continues, the country’s economy has taken a hit. The situation is much the same across the world. To tackle some of the issues, Chancellor Rishi Sunak is offering financial and fiscal benefits and packages to many affected people and businesses.

However, plans are in full swing on how to get the economy moving as soon as the crisis ebbs. Robert Pullen believes the answer lies in strengthening our appeal to foreign investors, which can be achieved through tax changes.

Bring back special tax regime

One key area to look at is the remittance basis, he says. This is a tax option for some UK residents living outside the UK.

“In order to kick-start the economy, HMRC could loosen the restrictions in this area,” he says. “For many years, non-doms have had a tax exemption on their overseas income and gains, provided the money is not brought into the UK. However, this has had a knock-on effect of dampening spending in the UK, as non-doms are deterred by suffering UK on any amounts brought into the country.

“For a limited time only, from April 2017 to April 2019, the UK government introduced an opportunity for funds frozen outside of the UK to be restructured and brought to the UK. Whilst complicated, this unlocked a significant amount of capital, which in turn would have begun circulating in the economy, generating profits and tax revenue, such as VAT on purchases.”

He believes we could see a major boost if the government reintroduced this special regime. It could also bring in more simplified rules, allowing people to “remit monies to the UK and pay a flat tax rate, of say 10%”.

Simplify double tax relief

Adam Smith, a partner in Blick Rothenberg’s UK/US tax team, also believes some tax relief is too complex.

He says: “Simplifying the way double tax relief works in the UK could prove to be a very popular way of encouraging inward investment – even if that results in a small ‘top-up’ payment being required to HMRC.

“Whilst there are some reliefs already available for non-doms to bring money into the UK, notably Business Investment Relief, it is generally accepted that the relief and the associated qualifying criteria are far too complicated.”

Stamp duty for foreign buyers

One major investment area for overseas investors is the property market. Property in UK cities in particular attract scores of foreign investors every year, providing a major boost to the UK economy. Areas like Manchester, Birmingham and Liverpool are now especially popular locations among such buyers.

In the latest Budget statement, Rishi Sunak said he would introduce a tax levy to foreign buyers. A 2% surcharge to the existing stamp duty charge will come into play from April 2021. While many believe the benefits of investing in UK property will override the cost, others are against the move. Particularly now, such inward investment is vital to the economy.

Upon the stamp duty hike announcement, BuyAssociation’s managing director Sam Hadfield said:

“If all three political parties are supporting this policy in some form, we have to pay attention to it. It will be interesting to see what effect it has in reality if it comes to pass.

“From our point of view, the UK housing market needs investment. Development has to keep up with demand, and we need the government to provide options to stimulate the housing market. Importantly, we need to encourage the development of the right type of stock.”

“It will be interesting to see what shape any efforts to encourage investment and building take. Building more houses ought to be the priority. Stamp duty reform across the board, not just for first-time buyers, could also provide a real incentive for people to keep buying and selling and stimulate the market further with more movement within the existing stock which in turn helps those trying to own their first home.”

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:


Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment


Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:


+44 (0) 333 123 0320

Open from 9am-6pm GMT


+852 6699 9008

Open from 9am-6pm HKT