The Financial Times quotes Sophie Dworetzsky on Labour’s plans to scrap the UK’s ‘non-dom’ tax status
On 29 July the Government issued a paper regarding the proposed reforms to the taxation of UK resident foreign domiciliaries (“non-doms”). This was somewhat unexpected, as it was widely assumed that the Government would not be saying anything on this until the Autumn Statement on 30 October.
For affected individuals and interested observers, there are positives and negatives to be drawn from the new paper.
However, in many respects the latest paper is disappointing. The Government has made clear that it is thoroughly committed to the 4-year “FIG” regime which was a central feature of the proposals unveiled by the Conservatives in their Spring budget in March 2024. The Government’s stated ambition is to implement an internationally competitive tax regime, but the widespread reaction since the FIG was first proposed is that a special tax regime lasting only four years will not be competitive, whereas a “lump sum” tax regime for a longer period could well fulfil that aim.
Presumably the Government’s thought process is that it needs to make these changes as quickly as possible, (1) to make good on pre-election promises and (2) so that it can start to reap the fiscal rewards of the changes. The concern amongst most tax advisers who are active in this area is that the proposals, if implemented in their current form, will have a negative rather than positive effect on tax revenues. The apparent benefit of acting quickly could therefore be illusory.
Sophie Dworetzsky, Partner, comments for The Financial Times and says that most advisers thought the plans if implemented would 'have a negative...effect on tax revenues", as current non-doms relocated and fewer arrived.
Read the full piece in the Financial Times here (subscription required).
