We are seeing a lot of clients looking to leave the UK. Ironically, these are UK domiciled individuals who are concerned about a change of government which might bring in a wealth tax and/or substantially higher tax rates than we have at present. Interestingly, we did not see such a large exodus of non doms when the tax changes were announced for non doms who have been resident in the UK for more than 15 years.
We are also getting a lot of questions about which country individuals should relocate to. This is not as simple as which country has the lowest tax, as so much will depend upon the individual’s personal and financial circumstances, as well as the makeup of their assets and income sources.
It is not only traditional tax havens that clients are interested in, such as Monaco or the Channel Islands, but other European countries, particularly Italy (helped by its new ‘non dom’ regime), Portugal (attractive for those with UK pension income) and Spain. There is also interest in the USA where, if you choose your state carefully, overall tax rates are lower than the UK. Of course, with many European countries, there is the added complication of how easy it will be to relocate there post-Brexit.
If you could make one change to tax law or practice, what would it be?
I would totally overhaul making tax digital for self-assessment. I am concerned that quarterly returns are likely to create additional work for very little, if any, benefit to either the taxpayer or HMRC. The idea of increasing technology in tax compliance is a good one, but it seems to be being rushed. HMRC has issues with its current software, PAYE records take months to be made available to taxpayers and too many taxpayers lack either the facilities or the knowledge to deal with this. Given several recent cases where electronic penalties and notices have been declared invalid, I think it important to make sure that tax law is keeping up with technology and HMRC practice.
What do you know now that you wish you’d known at the start of your career?
Tax is more complicated now than it was when I started out in my career in 1986. In those days, tax legislation could fit in two large volumes whereas today, it runs to five or more. As a result, advisers have to specialise in ever narrowing areas while still retaining a general knowledge and awareness of other areas of tax.
Also, the role of tax adviser is evolving. It’s not enough just to know about tax. You have to understand how to help clients achieve their goals both personally and professionally. Dealing with people is what I enjoy most about my role.
Are there any new rules that are causing a particular problem?
The ability to rebase non-UK assets to their market value at 5 April 2017 has been an enormous help to those non doms who were deemed UK domiciled from that date (and who had paid the remittance basis charge at least once). However, it is grossly unfair to those who became or will become deemed domiciled after that date and who are not able to rebase their assets to their market value at the point at which the individual becomes deemed domiciled. Just becoming UK resident one year later (so deemed domicile occurred from 6 April 2018 instead of 6 April 2017) means you are taxed on the whole of the gain since acquiring the overseas asset, rather than just on the post deemed domicile increase in value. In my opinion, anyone who was UK resident at 5 April 2017 should be able to rebase their non-UK assets at the date they become deemed domiciled in the UK.
Finally, you might not know this about me but…
I love learning languages. I studied French and Spanish at university, and I have been studying Russian for the last nine years and Portuguese for the last three. My goal is to be fluent in five languages, but I am not sure that I have enough time left!
We are seeing a lot of clients looking to leave the UK. Ironically, these are UK domiciled individuals who are concerned about a change of government which might bring in a wealth tax and/or substantially higher tax rates than we have at present. Interestingly, we did not see such a large exodus of non doms when the tax changes were announced for non doms who have been resident in the UK for more than 15 years.
We are also getting a lot of questions about which country individuals should relocate to. This is not as simple as which country has the lowest tax, as so much will depend upon the individual’s personal and financial circumstances, as well as the makeup of their assets and income sources.
It is not only traditional tax havens that clients are interested in, such as Monaco or the Channel Islands, but other European countries, particularly Italy (helped by its new ‘non dom’ regime), Portugal (attractive for those with UK pension income) and Spain. There is also interest in the USA where, if you choose your state carefully, overall tax rates are lower than the UK. Of course, with many European countries, there is the added complication of how easy it will be to relocate there post-Brexit.
If you could make one change to tax law or practice, what would it be?
I would totally overhaul making tax digital for self-assessment. I am concerned that quarterly returns are likely to create additional work for very little, if any, benefit to either the taxpayer or HMRC. The idea of increasing technology in tax compliance is a good one, but it seems to be being rushed. HMRC has issues with its current software, PAYE records take months to be made available to taxpayers and too many taxpayers lack either the facilities or the knowledge to deal with this. Given several recent cases where electronic penalties and notices have been declared invalid, I think it important to make sure that tax law is keeping up with technology and HMRC practice.
What do you know now that you wish you’d known at the start of your career?
Tax is more complicated now than it was when I started out in my career in 1986. In those days, tax legislation could fit in two large volumes whereas today, it runs to five or more. As a result, advisers have to specialise in ever narrowing areas while still retaining a general knowledge and awareness of other areas of tax.
Also, the role of tax adviser is evolving. It’s not enough just to know about tax. You have to understand how to help clients achieve their goals both personally and professionally. Dealing with people is what I enjoy most about my role.
Are there any new rules that are causing a particular problem?
The ability to rebase non-UK assets to their market value at 5 April 2017 has been an enormous help to those non doms who were deemed UK domiciled from that date (and who had paid the remittance basis charge at least once). However, it is grossly unfair to those who became or will become deemed domiciled after that date and who are not able to rebase their assets to their market value at the point at which the individual becomes deemed domiciled. Just becoming UK resident one year later (so deemed domicile occurred from 6 April 2018 instead of 6 April 2017) means you are taxed on the whole of the gain since acquiring the overseas asset, rather than just on the post deemed domicile increase in value. In my opinion, anyone who was UK resident at 5 April 2017 should be able to rebase their non-UK assets at the date they become deemed domiciled in the UK.
Finally, you might not know this about me but…
I love learning languages. I studied French and Spanish at university, and I have been studying Russian for the last nine years and Portuguese for the last three. My goal is to be fluent in five languages, but I am not sure that I have enough time left!
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