Inheritance tax
Catherine de Maid and Edward Hayes from Burges Salmon suspected Labour’s plans to reform inheritance tax treatment of existing non-UK trusts would be concerning to clients.
Hayes explained: “This will be difficult to accept for some, including in particular those who felt they were encouraged to establish trusts in the first place by the last round of non-dom tax changes in 2017.
“It could also have a material impact on whether large numbers of HNW and UHNW individuals choose to stay in the UK over the longer term or look to become non-UK residents.
“UK inheritance tax remains an outlier, in terms of rate and scope, compared to many equivalent developed countries. All that being said, some individuals will benefit significantly from the proposals Labour have announced. The impact will vary considerably depending on personal circumstances.”
Lizzie Murray, partner at Saffery felt the “balancing act” for the new government was to ensure that the UK remained an attractive place to come to for international families, investors and workers.
“There is a risk, not least with the proposed changes to IHT, that the UK's attractiveness and competitiveness is eroded, particularly given there are preferential tax regimes similar to the non-dom regime in other European countries such as Italy. It remains to be seen the impact this will have.
“There are many other factors in deciding where to settle, however, tax will be the driving factor for some and those impacted will naturally be reviewing their plans and future intentions, including planning to leave the UK or changing previous plans to move here.
“The new government will doubtless have a keen eye on migration figures, including for wealthy individuals, but they won’t be able to quantify the people who simply choose not to come to the UK because of any shake up to the non-dom rules.”
alina.khan@ft.com
