It’s very difficult for non-doms to get good advice because of the current political uncertainty, according to Tony Smith, head of tax, technical and advice delivery at SJP Middle East.
Speaking to FT Adviser, Smith discussed the non-dom tax changes announced by chancellor Jeremy Hunt in the Budget as well as the fact a general election could mean further changes.
He said: “In terms of the overall non-dom regime, people are looking at it today thinking what shall I do with my assets?
"But because it's all subject to consultation and because there is a general election looming and a Labour government might decide to have a different stance on some of the changes, it’s very difficult for a non-dom to get good advice today.”
Smith said it was important to keep a close eye on legislation while looking at a client's assets, and to consider what the impact of changing legislation could have, and then restructuring throughout the year.
“I’m always wary of consultations or doing anything until we have firm legislation to act on.
“Regardless of any of these changes, you'd hope that if somebody acts based on the changes announced, a new government would have some sort of system of grandfathering or honouring what a client has done in good faith,” he added.
Increased interest from clients
Since Hunt’s announcement to scrap non-dom tax, Smith said SJP Middle East has seen an increasing number of people coming to the firm with inquiries.
He said: “People are thinking about what they need to be doing with their own assets and some expats who have been out of the UK for 10 years are even considering whether they should return to the UK at all.
“This is because if the inheritance tax treatment ends up going through to legislation, as announced by Hunt, then this could be quite favourable for them. So non-doms are rethinking their entire retirement strategies.
“Where should they go next, should the return to the UK actually happen? And if they do go back, is there anything they could do to protect their assets?”
Smith believed if the changes were to go through as announced the UAE could see an increased number of people entering the region.
He explained: “Those that have already been in the UK for 10 years, assuming all of these announcements come into legislation, they're going to be subject to worldwide income and gains, and also UK inheritance tax.
"So they have got to start thinking about whether they're tethered to the UK, if they're not, and they've got the ability to choose where they reside, then surely people are going to start thinking, is it better from a tax perspective to be elsewhere?
“So the UAE has got to be in scope. Particularly from a tax perspective it's becoming a hub, it's where an awful lot of expats are currently resident, so it's got to be on their agenda.”
