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Britain still best for resident non domiciles

Written by Adrie van der Luijt

Thursday, 19 June 2008

A survey finds that the UK remains the best place to be a resident non domicile and industry is responding quickly to the changes.

Barclays Wealth has announced the results of the first formal research study into the attitudes and views of the UK's resident non domicile (RND) community since the revised Government budget proposals came into effect on 5 April 2008.

The research, commissioned by Barclays Wealth and conducted by wealth management strategists Scorpio Partnership, canvassed the view of leading advisers to resident non domiciles in the UK, including Barclays Wealth, five leading private client accountants and eleven leading law firms.

Fears of brain drain exaggerated

The firms are estimated to have advised at least 50 per cent of the UK's resident non domicile population. The research reveals that fears of a brain drain are probably exaggerated.

The events of the last few months have altered resident non domicile's attitudes to the UK, but overall they recognise that it remains the best place in the world to be with resident non domicile status.

City workers and professionals are here because of their employment and the opportunities in the UK which are hard to duplicate, so no mass exodus is foreseen at present.

Resident non domiciles are on the ball and despite the rapid implementation of the new rules which came into force on 5 April, the majority of the resident non domicile community have adapted quickly to the fixed charge concept.

Lifestyle has a part to play, as resident non domiciles are unwilling to leave the UK solely for tax reasons.

There are more practical considerations to be taken into account, including the education of children, culture and London's ambience as one of the world's great cities, which makes it all the more attractive for resident non domiciles.

Resident non domiciles' advisers who have international networks and unrivalled knowledge of international jurisdictions are still advising that, from a purely financial perspective, the UK remains, on balance, one of the best places in the world to be a resident non domicile.

UK property market

For the moment, London retains a critical mass of hedge fund managers and financiers. These professionals have a 'domino' mentality and are highly mobile, however, so this situation could change rapidly if only a small proportion of them elect to leave.

Ironically, current uncertainties surrounding the UK property market are playing a role in resident non domiciles not leaving the UK permanently; with the community being anxious not to sell up at a time when the best price might not be achieved on what has always been viewed by them as a long-term investment.

Cameron Fowler, managing director of Barclays Wealth International said that the messages in this research were clear and were in line with his own client feedback.

“There is no doubt that the non-domicile international professionals are now having to think a little harder about the decision to move to, or remain in, the UK - but the good news is that most still seem to think the UK is the place to be,” he added.

Fowler also confirmed that since the Government changes, Barclays Wealth has seen a sharp uplift in engagement with the resident non domicile community.

He said that there were a number of factors that affected an individual's decision to come or to stay.

“What we are finding is that once the impact of the regulatory changes is clearly explained, the many additional benefits of living in the UK come to the fore,” Fowler noted.

Changes in financial solutions demanded by clients

The attractions of the resident non domicile to the UK mean that there is no reason for wealth advisers to recommend resident non domiciles move elsewhere immediately.

This is, however, driving changes in the financial solutions demanded by clients. In terms of changes to planning strategy, most of the focus of private client advisers is on more sophisticated tax structuring.

People are looking at structures other than commonly used ones like trusts. These include limited liability partnerships for family succession planning, and sophisticated insurance policies, or "wrappers", which can be used to optimise income and capital gains.

While the complexities of the latest changes to the UK's regime for resident non domiciles have made the appointment of wealth advisers essential, it has become equally important for the advisory community to distinguish between resident non domiciles who are prioritising their financial situation and those who are prioritising their lifestyle as an important guiding factor in the planning and decision making process.

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