The proposals, due to come into force in April next year, mean that non-UK domiciles who have resided in the country for more than 15 of the past 20 tax years will now automatically be deemed UK-domiciled.
“With so much uncertainty created by Brexit it would be sensible and justified to pause for breath to properly assess any further negative impact caused by the proposed non-dom tax reforms.
“A 12-month delay to the rules being implemented, as is being rumoured, would be welcomed and would convey a message that concerns are being listened to,” BFMO’s group director, Phil Knop, told International Adviser.
He added that a possible postponement would provide a “small window of opportunity” to lobby for a more permanent “amnesty” on future non-dom tax changes, urging Britain’s new government to be “bold” and retain foreign nationals coming to live and work in the UK.
However, Knop, whose firm advises wealthy expats living in the UK, did concede that any delay is likely to be temporary.
“With so much uncertainty created by Brexit it would be sensible and justified to pause for breath to properly assess any further negative impact caused by the proposed non-dom tax reforms."
“It is not unheard of for governments to change their mind on key proposals at such an advanced stage but if anything is to change I do foresee this as being just a temporary reprieve,” he said.
Formed in the wake of the Brexit vote last month, the cabinet reshuffle saw the new prime minister Theresa May appoint Hammond to replace George Osborne, who announced the new non-dom rule during his annual budget back in March.
Although Hammond has said he will not announce any tax changes until the autumn statement in October, last week Old Mutual’s financial planning expert Rachel Griffin predicted a possible delay to the non-dom reforms.
However, tax experts such as RSM’s George Bull told IA that although “we are not much further forward in understanding how these new rules will operate”, he thinks it unlikely the changes will be scrapped.
The view is backed by Strabens Hall, the international IFA firm with offices in London and Hong Kong. The firm’s director John Halley believes the reforms will go ahead as planned but said it’s unlikely they will dissuade foreign nationals from coming to the UK.
“It is important not to forget that the new rules will only bite once someone has been resident in the UK for more than 15 years.
“Until then, individuals will still be able to access the remittance basis of taxation and so the UK will continue to provide a relatively benign and attractive fiscal regime for resident non-doms able to take advantage of this,” he said.
Corporate tax rate
Earlier this month, following the market volatility seen in the aftermath of the EU referendum, George Osborne proposed cutting corporation tax to 15% - the same level as popular offshore tax haven Mauritius – in bid to boost the economy.
Describing the move as a “continuing trend”, Bull said the tax rate, which currently stands at 20%, is unlikely to drop to 15% until 1st April 2021 “at the earliest”.