Offshore

Non-Doms Are Falling Out Of Love With The UK - Survey

Tom Burroughes, Group Editor, London, 25 July 2016

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A survey of non-domiciled residents in the UK finds that many are thinking of leaving the country amid a major change to tax rules affecting people with this status.

More than a third of people with non-domiciled status in the UK are thinking of quitting the country forever, and almost two-thirds of those surveyed by accountants Moore Stephens said changed tax status was forcing them to walk out.

Moore Stephens found that 37 per cent of non-doms are considering leaving the country permanently, a fact that could cause “serious harm” to the economy, particularly at a time when foreign-sourced investment and income is important to the UK as it looks to life outside the European Union.

The organisation polled 115 non-doms.

Former finance minister George Osborne in 2015 introduced measures, effective from April 2017, that change the tax status of non-doms who have been resident in the UK for a prolonged period of time. The idea that a person can be a permanent non-dom – thereby benefiting from not having to pay UK tax on worldwide income so long as they pay a fee – has been scrapped. Defenders of Osborne’s move say it ends an unjustly generous tax break for the super-rich which is difficult to sustain at a time of economic austerity. Critics say it will reduce revenues and drive investors elsewhere. At the time of the change, the UK Treasury said about 15,000 people could be affected. (Osborne has been recently removed from his job as part of the change of leadership in the Conservative-led administration post-Brexit.)

Non-dom status will be taken away from those who have lived in the UK for more than 15 of the last 20 years. To see a detailed analysis of the issue, click here.

The change means that non-doms who lose this status will be considered UK domiciled for income, capital gains and even inheritance tax purposes.

“In order to keep non-doms and other HNW investors in the UK the government must make sure we are an attractive option compared to other countries, many of which offer very similar advantages,” said Simon Baylis, partner at Moore Stephens.

It is particularly important to retain key tax incentives to encourage wealthy individuals to reside in the UK in the wake of last month’s Brexit vote, he said. “The new Chancellor [Philip Hammond] should take measures to encourage non-doms to the country - making sure that further steps aren’t taken to dissuade HNWs from residing here,” Baylis said.

 

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