Planning can mitigate this to some extent but, regardless of one’s views on inheritance tax in principle, it remains a significant factor for those who can choose where they base themselves and their businesses.
The abrupt changes to the taxation of trusts will also be seen as harsh by many who feel they were expressly encouraged to create such structures when the government last reformed the non-dom regime in 2017.
The ugly
Historically, the UK has enjoyed a reputation as a stable jurisdiction where significant tax changes are made after consultation and with sufficient warning to plan accordingly.
The handling and timing of these reforms undermines that reputation. Those affected have little over a year until April 6 2025 but cannot yet plan effectively with much of the detail still to be clarified (draft legislation may not be published for several months).
Given the possibility that Labour will take power before April 2025 and make further changes, no one can honestly say they know how non-doms will be taxed next year.
Such uncertainty damages the UK’s attractiveness whatever the final legislative outcome.
If the UK is serious about attracting international talent, it needs to:
- ensure that its immigration and tax systems work coherently together (there is no point trying to use tax incentives to attract people who cannot get a visa);
- benchmark its offering (of which tax is just one aspect) against the best available in Europe; and
- implement a long-term, stable tax code (with clear policy goals and to which material changes are made only after rigorous consultation).
Edward Hayes is a director in the private client team at Burges Salmon
