Kamala Harris’ tax proposals won’t hold back UK businesses

Simon Gleeson, Partner said:

Kamala Harris’ proposed corporation tax rate of 28% would be one of the highest of developed world economies. In comparison, the UK’s corporation tax rate is 25%.

However, this increase will have little impact on US FDI into the UK. Recent figures published by the UK Department for Business and Trade show that the US is the leading source of FDI in the UK across 2023-2024, accounting for 26% of the 15,555 new FDI projects in the UK.

Some UK businesses start their expansion into the US by opening a support office based there. As the tax charge is calculated on a percentage of their US cost base, it will not be a large increase. The valuable opportunities that UK businesses can gain from US expansion will easily outweigh the corporation tax rise.

Bal Lota, Partner also commented:

Kamala Harris’ proposal to increase the Child Tax Credit from $2,000 to $6,000 is likely to be welcomed by many American families, but American expats may be unable to benefit from this.

For taxpayers the Child Tax Credit is reduced if adjusted gross income exceeds $400,000 for joint filers and $200,000 for other filing status based on current thresholds. American expats on secondment in London or further afield may find their compensation exceeds these thresholds when secondment related non-cash benefits are factored in.

If their employers implement a ‘tax equalisation’ arrangement those expats may be in a position to claim Child Tax Credit. A ‘tax equalisation’ arrangement means employers ensure employees have approximately the same net or ‘take home’ income they had in their home country. Unfortunately, this arrangement can be complex and time-consuming for employers to set up.

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Simon Gleeson or Bal Lota using the form below.