The new coalition government in the UK has wasted little time in sitting down to address the UK’s budget deficit and ballooning national debt. Although the Lib Dem’s manifesto policy to introduce a “Mansion Tax” has been binned and there are signs the Tory’s raising of Inheritance Tax limits will also be binned, there is speculation that capital gains tax (CGT) will be raised from its current flat rate of 18% to 40% (or indeed 50%).
The prospect of a change to the CGT rate has apparently rattled some of NAMA’s “clients” (NAMA is after all a loan manager in the early days and is dealing with borrowers as would a traditional lender) to the extent that they are running CGT scenarios on business plans. Yesterday the Sunday Tribune reported on the matter. With an estimated €22bn of the €81bn of NAMA-bound loans secured on assets in the UK, unhedged exchange rate exposures, regulatory and tax changes will need to be constantly monitored.
Whether British non-doms will be exposed to changes in CGT is not clear. The extent to which assets are owned by corporate entities who might be exempt is also not clear. What is clear is an eye needs to be kept on what this new UK administration is doing to tackle its severe economic problems, and even with CGT, raising VAT and slashing the public sector more is likely to be needed.
NAMA Wine Lake 