Non-Dom Changes: Our Initial View

WHAT’S HAPPENED?

Labour announced yesterday various proposed further restrictions to the ‘scrapping’ of the non-dom scheme proposals introduced by the Conservatives during the Spring Budget. Further detail has yet to be provided but the high-level summary includes: the abolishment of the 50% tax discount for non-doms bringing in foreign income in 2025/26; and bringing ‘excluded property trusts’ within the scope of UK IHT.

Whilst the first point is simply a tightening of a new proposal introduced by the Conservatives, the second point is a major and fundamental change to the existing tax rules. It seems far too punitive a proposal and would no doubt be a significant consideration for non-doms (and deemed doms, who settled non-UK trusts with non-UK situs assets whilst non-dom) currently residing in the UK to seriously consider leaving, who might otherwise not have done so.

This seems to be a tough reaction from Labour to the Conservatives ‘stealing their thunder’ by announcing they would scrap the non-dom scheme during the Spring Budget, a policy the Labour Party had already been very vocal about.

We hope the element of political posturing at play here will be calmed, should Labour win the upcoming general election, with a more reasoned and thought out set of proposals that will have been the subject of consultation and feedback from the industry.

It is not yet clear when the proposed effective date of Labour’s proposals would come into play (if they make it through to draft legislation) or if anti-forestalling provisions would apply, so planning in the interim comes with inherent and unwelcome uncertainty. Comments have been made as to the potential for retrospective legislation – whilst not impossible, our view is this would be very unlikely, especially when the policy comes from a change in government.

Our view is that balance sheets and future plans should be reviewed to understand how these proposals would impact individuals and their families, with a plan of action established so that they may ‘press the button’ on implementation once further clarity has been provided, should the opportunity be available to do so.

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HOW CAN WE HELP?

From the outset of Hundle, we have recognised that ongoing personalised wealth structuring is essential to our clients. This is particularly valuable to clients who require inter-generational planning and asset protection.

As part of our offering, our clients have direct access to our Head of Wealth Structuring, Andy Sams. Andy has over 15 years’ experience of advising Ultra High Net Worth individuals and their families. His experience ranges from advising on the acquisition and sale of closely held businesses and private equity interests, the establishment and evolution of multi-jurisdictional family office structures including the use of onshore and offshore trust structures, as well as dealing with family governance and succession planning matters.

Our wealth structuring team work closely with our investment team to ensure that all client portfolios are structured so that they are efficient in terms of risk, liquidity and tax. We have extensive experience in dealing with cross-jurisdictional issues and can engage with existing advisers, or recommend specialists.

We take into consideration our clients’ total balance sheet and build a tailored strategic plan to manage income and cashflow over the long-term. We can advise around asset expenditure, including property, and will always ensure that our clients have sufficient liquidity available in case their circumstances change.

If you have any questions, or would like to discuss how changes to non-dom rules might effect you and your family, please reach out to our wealth structuring team.