Impact of changes on UK non-doms
The question, therefore, remains whether these measures, and the announced transitional provisions will cause HNW non-doms to leave the UK or take other steps which could be detrimental to the UK.
To assess the likely impact, we carried out a survey of our non-dom clients which revealed that of those who owned a business in the UK, 23 per cent said they were considering selling their business after April 2017.
Should non-doms decide to sell their businesses, the UK economy would suffer a serious blow, losing high-value jobs and investment.
The changes to their tax status has, as would be expected, sparked concern amongst non-doms and provoked many to also reconsider where they wish to live.
Indeed, of the non-doms surveyed, 37 per cent said that they were thinking of leaving the UK, citing the changes to tax status and the recent Brexit vote as the main reasons for leaving. This reflects our experience in practice, as about a third of our non-dom clients are actively considering leaving the UK.
If non-doms themselves decide to leave the UK, there will obviously be an adverse effect on UK business, with 41 per cent of non-doms expecting staffing levels in their UK businesses to decrease as a result of the April 2017 changes.
Aside from the recent changes to their tax status, uncertainty over what the UK’s decision to leave the EU will mean for the UK’s trade links with EU countries has meant that business owners are considering the location of their UK-based businesses.
The survey also revealed that 20 per cent of non-doms who own UK property are thinking of selling within the next three years, indicating that many non-doms are anticipating a move in the near future.
Should a high proportion of non-doms sell their UK property there could be severe repercussions for the UK’s luxury property market, particularly in London directly affecting those property developers, real estate agencies and individuals involved in this market.
Although the housing market can be unpredictable, losses for central London developers are likely to have some negative effect on the rest of the market.
The UK is in a global market to attract international mobile HNW individuals to live and spend in the UK. There are many other places which offer attractive tax benefits, as well as similar lifestyles and education systems, so it is important that the UK government recognises this and takes steps to make sure non-doms continue to choose to come to and remain resident in the UK.