UK: UK to ‘reverse unintended’ non-dom hit to overseas bank accounts

The UK government is expected, according to reports, to reverse a technical element of its non-dom tax changes relating to money held in overseas bank accounts.

Specifically, the Treasury is looking to amend the provision in the Finance Bill that would have unintentionally taxed non-doms on money moved between overseas bank accounts — even if it was earned in prior years when they were exempt from UK taxes.

Under the revised approach, only new foreign income will be taxed, and past earnings will remain untaxed unless brought into the UK.

Commenting on the latest tweak to Rachel Reeve’s move to abolish non-dom status, Marc Acheson, Global Wealth Specialist at Utmost Wealth Solutions, said: “Whilst a helpful development, ultimately this isn’t going to shift the dial.

“The UK has already seen an exodus of non-doms following the measures announced at the Budget and many of our clients have been exploring other jurisdictions in the EU and UAE.

“To meaningfully reverse this trend, the Treasury needs to look at the erosion of IHT protections on existing settlements.

“This is the single biggest factor as to why non-doms are unprepared to stay as many accumulated their wealth prior to coming to the UK and were able to shelter it under previous structures.

“With the removal of these protections, they face a 40% IHT charge on their entire global estate making the UK an outlier compared to other jurisdiction.”