A Preston-based accountancy firm, Rotherham Taylor, has urged caution over the tax treatment of those “highly mobile individuals” currently classed under non-domiciled tax rules as election fever turns its attention to so-called ‘non-doms’.
The Chancellor’s 2024 Spring Budget saw the announcement that the non-dom tax regime, allowing individuals who reside but are not domiciled in the UK to enjoy certain tax benefits, would be abolished and gradually replaced with a residency-based system.
Additionally, said the firm, as a general election approaches and further fiscal policies are revealed, non-domiciled individuals are now facing the erosion of a proposed transition period which could ease the tax burden of abolishing the non-dom scheme on high-net-worth individuals with UK residency.
In particular, the Shadow Chancellor Rachel Reeves has proposed scrapping a 50 per cent discount on tax in the first year of the new rules, as well as introducing Inheritance Tax obligations for assets originally ringfenced by former non-dom policies.
As an expert in the international tax space, the firm said that new regulations, while not disastrous for resident non-doms, could force highly mobile individuals to make a choice over where to keep and accrue new assets.
“The non-domicile tax rules only affect a small group on individuals,” said Michael Barton, Director at Rotherham Taylor.
“In effect they can choose where they pay their taxes. The Shadow Chancellor’s proposals, whilst on the face of it sensible and fair, may very well reduce the overall tax take as the people affected take their money and live elsewhere.”
“The transitional period revisions for non-dom status, proposed now across the political spectrum, will only exacerbate the dilemma.”
