Counting taxable capital gains as income reveals that the top 1 percent of adults in the United Kingdom received “a far greater and faster growing” share of income before the COVID-19 crisis than previously thought, according to economists.
Capital gains are “a major source of income” but are excluded from official income statistics, researchers from the Resolution Foundation, the London School of Economics and Political Science, and the CAGE Research Centre at the University of Warwick noted in a report titled, “Who Gains? The Importance of Accounting for Capital Gains,” published on May 21.
The researchers question whether the current, lower tax rates for capital gains can continue to be justified. “A lot of capital gains are, in fact, just repackaged income going to the already-rich,” Andy Summers, assistant professor at the London School of Economics and Political Science, said in a statement.
My new story for Tax Notes, May 23, (paywall):
New Capital Gains Research Informs U.K. Tax Policy Debate
The Scottish Parliament has approved a measure to exclude companies based in tax havens from coronavirus-related grants after members backed a Scottish Green Party amendment to emergency legislation.
The measure in the Coronavirus (Scotland) (No. 2) Bill, passed on May 20, is intended to exclude “those who seek to minimize their tax arrangements to the detriment of the wider economy,” according to a Scottish government statement.
Part 11 of schedule 4 to the bill establishes that, before providing a coronavirus-related grant to a person, Scottish ministers must consider whether the person “is based [i.e., incorporated or otherwise established] in a tax haven; is the subsidiary of a person based in a tax haven; has a subsidiary based in a tax haven; or is party to an arrangement under which any of its profits are subject to the tax regime of a tax haven.” In those circumstances, the ministers “are not to provide the grant.” The measure is set to expire at the end of September.
“Tax haven” for this purpose means a jurisdiction included for the time being in the revised EU list of non-cooperative jurisdictions.
My news story for Tax Notes, May 21 (free to view):
Scotland Bans COVID-19 Grants for Tax Haven Companies
Implementing the Brexit deal will involve border checks on goods entering Northern Ireland from Great Britain but there will be no new customs infrastructure, according to the U.K. government.
A Cabinet Office paper published on May 20, outlining the government’s approach to the protocol to the EU withdrawal agreement, focuses on customs and trade.
The paper notes that article 4 of the protocol, designed to prevent a hard border on the island of Ireland, is “clear that Northern Ireland is fully part of the U.K.’s customs territory.” U.K. authorities will apply EU customs rules to goods entering Northern Ireland, enabling the collection of tariffs on goods at risk of entering the EU’s single market at the port of entry, rather than at the land border that forms the legal boundary between the U.K. and EU customs territories.
My news story for Tax Notes, May 21 (paywall):
U.K. Minister Outlines Approach to Northern Ireland Protocol