UBS Wealth Management's Sarah Allatt shared her views on the UK's non-dom tax regime reforms with this publication.

The head of wealth planning at the world's largest wealth manager says the UK “will remain an attractive base” for the super-rich despite changes to the nation's non-domiciled tax regime, which take effect today. 

Today, 6 April, marks the beginning of the new tax year, and with the fresh start comes a hangover for non-domiciled taxpayers, or non-doms. 

The reforms, outlined by former chancellor of the exchequer George Osborne in his 2015 budget, have brought to an end permanent non-dom status for tax purposes. 

Under the new rules, non-doms who have been a UK resident for 15 out of the past 20 years will be deemed as UK-domiciled for all tax purposes, regardless of when they came to the UK. Worldwide income and gains are therefore subject to UK tax. 

The changes also mean that non-doms can no longer use an offshore structure, such as a company or trust, to sidestep inheritance tax levied on UK residential property. 

But Sarah Allatt, head of wealth planning advisory at UBS Wealth Management, says the reforms will not be detrimental to the UK's status as a hub for the ultra-rich. 

“Although the beneficial tax regime available to UK resident non-doms is now time-limited, the UK will remain an attractive base for wealthy individuals and families,” she said. “That is unlikely to change overnight.”

Allatt says that compared to other jurisdictions, including many in Europe, the UK's regime will still be appealing and will continue to entice wealthy people to move there. 

But the changes have not made wealth advisors' lives any easier.

“If anything is certain, it is that clients, wealth advisors and clients' legal and tax advisors have been very busy preparing for these changes,” Allatt said. “It has been a meticulous process - one that involves taking the necessary steps to consolidate, simplify and structure the assets of those affected to ensure they remain tax-compliant and tax-efficient.”

Potential backlash
Meanwhile, a tax partner from accountancy firm MHA MacIntyre Hudson has warned that non-doms who have failed to properly prepare are likely to be affected by the reforms.

“Many will have made significant changes to their tax planning in preparation but if they have not, the changes are likely to hit hard,” said Nigel May, tax partner. 

May says those who own UK residential properties will need to make new arrangements, as trust structures holding UK properties may become ineffective and therefore tax-inefficient. 

“The tax charge [could] potentially [be] payable both by the trust and on the death of the person who created the trust,” May said. “Consideration will need to be given to such structures and, where appropriate, steps taken to unravel them.”