PwC delivered its annual tax conference at the Mount Murray Golf Club on Tuesday 14th July to an audience of more than 100 local business people.

A series of presentations provided commentary on tax issues relevant to the Isle of Man and also looked at what may be on the horizon.

Kevin Cowley, Tax Partner, opened with a summary of the key economic and political issues that the Island faces at the moment, setting the scene for the rest of the conference.

Guest speaker Nicola Guffogg, Assessor of Income Tax, spoke about the Island’s tax system, with reference to the Manx 2013-2016 taxation strategy and the current income tax return system, highlighting figures showing that, out of around 57,000 individual income tax assessments sent out each year within the Island, only 12,000 are completed online.

Nicola also touched upon the proposed new Manx tax system, which will be put to consultation over the next few weeks, and the changes it could bring for personal tax affairs.

Turning to the UK Budget announced earlier this month, Kevin discussed key points of the first all-Conservative Budget since November 1996 and how the Isle of Man is likely to be affected. Looking at the positive feedback that the new family home (or ‘inheritance tax (IHT)’) allowance has received, Kevin advised:

‘This is not quite the deal it is cracked up to be, and we might see client behaviours adapt to reflect that. Firstly, it is only about the family home; secondly, it only applies on death, so lifetime transfers are not covered by this new banding; and, finally, it is only for transfers to direct lineal descendants. Also the main nil-rate band, which can cover any assets and not just the family home, is going to be frozen for another six years.’

Another issue addressed was the impact of non-domiciliary changes. Effective from April 2017, these could be ‘bad news’ for the Isle of Man; once the new rules are in place, all UK residential property will be subject to IHT, regardless of how it is held. However, Kevin did reassure guests that there may be a ‘glimmer of light’ as the UK government has stated that any ‘excluded property trusts’ set up prior to April 2017 will still be effective.

Phil Morris, Tax Senior Manager, presented on UK residential property tax systems, addressing the introduction of Annual Tax on Enveloped Dwellings (ATED) and Capital Gains Tax (CGT) systems. Phil provided an in-depth look at both regimes, and evaluated how well CGT will actually work in practice; he concluded that CGT ‘is not a true withholding tax’ and that ‘there is no obligation on those involved in transactions to collection the tax due’.

The presentations were rounded off by George Sharpe, Tax Director, who discussed new Base Erosion and Profit Shifting (BEPS) and Diverted Profits Tax (DPT) laws and what they mean for the Isle of Man. George established that the new laws are ‘yin and yang’ for the Island, and that coherence, substance and transparency are the key themes to adhere to.

Proceedings concluded with a lively Q&A between the guests and the speakers on issues raised in the presentations.

Commenting later, Kevin said: "The event was a great success, and very well-timed to coincide with George Osborne’s UK Budget announcement, which gave us the chance to reflect on how this will affect the Isle of Man. PwC strives to provide value to its clients by giving insight into the business issues of the day, providing practical and business friendly advice and assistance, and our annual tax conference is just one example of how we endeavour to achieve this."

Photo - (L-R): Phil Morris, Nicola Guffogg, Kevin Cowley, George Sharpe.