Trustees need to be prepared for changes, regardless of the outcome of the UK election on 4th July, delegates at EY’s recent tax update were told.
Guernsey professionals gathered at EY’s Tax Update at the Old Government House Hotel to find out about the latest tax developments, drawing significant attention to UK changes relating to private clients and the implications of BEPS 2.0’s Pillar Two for Guernsey companies in multinational groups.
The seminar was led by David White (pictured), EY’s Head of Tax in Guernsey and he was joined by colleagues Chris Manley, Tax Manager in EY’s Channel Islands Private Client and Trust team, and Aoife Walsh from EY’s UK Private Client and Trust team. Together, they shed light on the latest changes in corporate tax and private client matters and what they mean for high-net-worth individuals, trustees and businesses in the island.
Described as a ‘dramatic change in the international tax landscape’, the introduction of BEPS Pillar Two is a measure that many governments worldwide have already implemented or are poised to implement.
It is designed to discourage profit-shifting by multinational enterprise (MNE) groups with a global turnover of $750 million by setting a requirement that they pay a 15% global minimum effective tax rate (ETR) in each jurisdiction where they operate. Guernsey has indicated its intent to align with Pillar Two by 2025 and this is set to have a significant impact on MNEs with operations in Guernsey.
David explained how businesses can prepare for these changes: “Aside from the potential additional tax burden in Guernsey, one of the practical impacts we foresee for MNEs with operations in Guernsey is the additional disclosure requirements for financial statements, with specific requirements around Pillar Two disclosures once Guernsey’s law is substantively enacted later this year. For those who fall into the scope of the new regime, an impact assessment is advised to understand the full extent of expected Pillar Two taxes in Guernsey and the relevant disclosure requirements.”
On the private client side, with both Labour and Conservative having pledged to replace the current non-dom regime, trustees are anticipating a period of change from 6 April 2025. Chris explained what trustees can be doing to prepare for the likely changes: “We know that both Labour and Conservative have pledged to replace the current non-dom regime, so big changes can be expected regardless of the outcome of the UK election.
“We are seeing a mix of reactions, with some already choosing to leave the UK in anticipation of the changes, while others are waiting until the end of the summer to see what any new regimes will look like in practice. Although the finer details remain uncertain, trustees can prepare for the impending changes by seeking advice on reviewing their structures and planning for the possible outcomes.”
Aoife concluded the seminar with an update on the current focus of HMRC and enquiries they are receiving which include ‘nudge letters’ and tax enquiries related to offshore trusts and corporations.
Aoife explained: “When it comes to HMRC, the message is quite simple: they are not stopping for the election. They are still very much active, and we have seen a number of trusts being challenged by HMRC in recent weeks.”
The seminar concluded with a compelling call to action, urging the audience to review their offshore structures in anticipation of potential legislative changes, to proactively engage with the evolving tax landscape, especially in light of BEPS 2.0, and to underscore the necessity for due diligence and expert advice in tax planning and compliance amidst prevailing uncertainty.
