Business Investment Relief (BIR): a hidden gem for non-UK domiciled individuals?
We had a meeting yesterday in London with a Russian domiciled individual. This had been organised by a chap, who worked for a large business, looking to raise capital. The chap had asked me to attend to advise his client on some of the potential structuring issues and opportunities that might flow from a potential investment of overseas funds.
It was slightly surprising to find that neither of them had heard of Business Investment Relief (BIR) especially considering that the proposed investment should fall fairly and squarely within the relief.
The relief is relevant to non-doms who are on the remittance basis of taxation. This basis of taxation affords non-doms the privilege of holding their foreign income and gains offshore without any UK tax. If they decide to bring those funds to the UK (a remittance) then the underlying income and gains will be taxable absent any relief.
In short, BIR allows a non-UK domiciled individual who is taxed on the remittance basis to use that ‘idle’ money (from a UK perspective) held overseas in the UK as long as the form of the remittance is that of a qualifying investment in a qualifying UK commercial activity.
The form of the investment is generally more flexible than that set out, for example, for the purposes of EIS and Seed EIS schemes. Therefore, one may qualify for BIR but not under the EIS schemes.
For a full overview please see our practice note.
Our view is, and we are sure you will agree, that in the right circumstances this is an incredibly valuable relief.