Wealth managers cheered by new non-dom rules

 
City A.M. Reporter
The City's private wealth industry received a boost after the Budget's reform of how the UK's wealthy non-domiciled residents are taxed proved more benign than expected.

Chancellor George Osborne said 'non-doms' – people resident but not domiciled for tax purposes in the UK – will have to pay more after living here for 12 years.

With the government grappling for cash to lower massive deficits, many feared a significant hardening of the non-dom rules, potentially damaging London's burgeoning wealth management industry.

Non-doms, who currently pay a £30,000 annual levy after seven years, will now 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.

London wealth managers enjoy a competitive advantage in being able to run money offshore for thousands of highly paid foreign City financiers and residents who use London as a tax haven.

A multi-billion dollar industry providing investment and banking services including premium credit cards and and private jet financing has grown up around these communities but faced an uncertain future if the rules had hardened.

Osborne also said there would be "no other substantive changes" to the non-dom rules for the remainder of the current parliament.