Wealth industry relieved over new rules on non-doms

| 24/03/2011

(Reuters): Britain’s private wealth industry, servicing the colonies of rich foreigners resident in London, was granted a boost after reforms of how their overseas money is taxed proved more benign than many had feared. In a budget speech on Wednesday, Chancellor George Osborne said people resident but not domiciled for tax purposes in the UK — commonly known as ‘non-doms’ — will have to pay more after living in Britain for 12 years. With the new coalition government grappling with deficits, many had feared a significant hardening of the non-dom rules, potentially damaging London’s burgeoning wealth management industry.

So called non-doms, who currently have to pay a 30,000 pounds annual levy after seven years, will pay 50,000 after 12 years but will not pay tax on foreign income or capital gains remitted to the UK if it is invested in British business.

"Everyone was worrying about the worst case scenario… It’s a lot better than it could have been," said Sophie Dworetzsky, a partner specialising in private client wealth management at law firm Withers.

Many had warned of damage to a competitive advantage enjoyed by London wealth managers, running money offshore for thousands of highly paid foreign financiers working in the City and less economically active residents who use London as a tax haven.

Campaigners against tax havens were disappointed. "Oh dear. It looks like the chancellor has let non doms off the hook," said John Christensen, director at Tax Justice Network, which campaigns against tax havens.

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