Head of Private Wealth Peter Daniel comments on the Chancellor’s intention to abolish non-dom system and replace it with a residency-based system:
“The headlines will be that the non-dom tax regime has been “scrapped”. In reality, it has been rebranded and simplified. The determining factor being years of tax residence, rather than the amorphous concept of domicile, will bring clarity. While the period during which people will have income tax and CGT benefits will be much reduced, for those first four years the position will be far more straightforward, with no complex remittance rules. The changes will also encourage foreign funds to be brought to the UK, rather than incentivising the opposite, as the current system does. The biggest unknown is how the IHT position will be affected, on which the Government will “consult”. For many foreigners moving to the UK, IHT will be far more important than income tax. The potential risk of exposing their worldwide assets to IHT if they are hit by a bus during a relatively short time living in the UK will be hugely concerning, particularly if their home countries have no similar tax, or one at much lower rates.”
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