• Chris Goddard, Director |

The UK Chancellor, Rishi Sunak, will deliver the next UK Budget on 3 March 2021, the first since the UK completed its departure from the EU. There have been lots of rumours circulating about the possible UK tax changes that could be ‘on the table’ (although the ongoing pandemic could result in a change in course at the last minute).

In this Blog, we explore some of the possible UK tax changes that could be announced, and specifically what this may mean for individuals and businesses in Switzerland. A further Blog will follow after 3 March, to reflect on the actual announcements.

UK capital gains tax

It is well known that the Chancellor is targeting changes to the UK capital gains tax (‘CGT’) regime. He tasked the “Office of Tax Simplification” to review the UK CGT regime last year, and numerous recommendations have since been put forward to the Chancellor for its modification.

The most important recommendation is to more closely align the UK CGT rates (currently up to 20% / 28%) with UK income tax rates (currently up to 45%). Whether any rise in UK CGT rates would be introduced gradually, or in a single jump, remains to be seen (if done in a single jump, it is likely that this would be delayed until at least 2022 to allow individuals to plan accordingly – which could stimulate economic activity as investors seek to realise gains before the rate rise).

Such an increase to CGT rates would raise some interesting questions, for example:

  1.  Would any changes be made to the UK reporting fund regime? If not, would non-reporting funds no longer be so unattractive for UK investors?

  2. Would UK investors become more interested in investing in structured products issued by Swiss banks (which have historically been largely unattractive to UK residents due to the adverse ‘DDS’ classification)?

  3. Would the ownership of residential property in the UK become less attractive for non-residents? What would the impact be on Swiss residents who own UK property considering a sale? How would this affect foreign collective investment schemes and trusts that hold UK property?

Wealth tax

The UK does not levy a net wealth tax in the same way as we know it in Switzerland. Whilst there have been whispers that the Chancellor could introduce a (one-off) wealth tax in the UK as a revenue generating measure to aid recovery from the pandemic, we consider this to be unlikely given the opposition this could raise from the Conservative Party’s political base.

Were this to be introduced, however, the complex questions of (1) asset / business valuations, and (2) treatment of trusts and foundations and the like, would need to be properly addressed.

UK corporation tax

The UK corporation tax rate of 19% is already well below average amongst European countries. Although the original objective of the UK government was to further reduce the UK corporation tax rate to increase competitiveness in the wake of Brexit, a further reduction is not expected at this time given the state of the UK’s public finances. In fact, a (temporary) rise is more likely (although any rise may only apply to large businesses, and not SMEs).

UK corporation tax rates could be raised by several percentage points (e.g. up to 22%) and still remain below the European average (but notably higher than in many Swiss cantons). Furthermore, given the level of restrictions in place currently to control the pandemic, it is unlikely that a rate rise would cause a significant departure of large businesses from the UK.

Swiss businesses with UK branches or subsidiaries would need to be aware of any sudden rise in corporation tax rates, and plan accordingly.

UK resident non-domiciled (UKRND) regime

The UKRND regime has not been under the microscope of the UK government recently, and it is not expected that any (meaningful) changes will be made to the regime in the upcoming Budget. If confirmed, this would be welcome news for Swiss banks and fiduciaries that have a large UKRND client base.

Other changes

Other rumours suggest that the UK Chancellor could:

  • Reduce income tax relief on pension contributions

  • Extend the current stamp duty holiday for purchases of all properties under GBP 500k (currently due to expire on 31 March 2021)

  • Increase the tax relief limits for investment into young/ start-up businesses (Enterprise Investment Scheme / Venture Capital Trusts, etc.) (to compensate for any rise in UK CGT rates)


Individuals and businesses in Switzerland with a close connection to the UK, or serving UK resident clients, should closely monitor the announcements contained in the 3 March Budget, and react accordingly to any developments (especially should any planning opportunities arise). The approach that the Chancellor takes to reforming the UK CGT regime is likely to be of particular interest in this respect.

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