It’s been revealed non-doms will only be taxed on the earnings they bring into the UK and not their worldwide tax affairs. These affairs had been caught under the previous policy announced in that contentious pre-budget report last year.
However, non-doms who have lived in the UK for seven years will still have to pay an annual tax of £30,000.
CBI deputy director-general John Cridland says the announcement is a “victory for common sense”. He adds: "The proposals were clearly cobbled together in a hurry and went a lot further than the £30,000 headline figure, with the clauses on trusts and the retroactive aspects for taxing gains particularly punitive.
"It was not just a tax on the ‘super-rich’ but affected tens of thousands of accountants, lawyers and managers who work hard in the UK and help generate huge amounts of wealth for the economy and the Treasury."
PKF national director of tax Lisa Macpherson supports the change but adds, rather scathingly, that “the way this legislation is being introduced is causing confusion and chaos”.
“We are facing a situation today where clients are liquidating off-shore companies and trusts, which they may not have needed to do. It currently isn’t clear what taxpayers should be doing. Should they be staying or leaving?”
Macpherson urges the government to delay the introduction of the legislation, while Cridland says: “We need the government to be more careful in future about sending out a message that Britain is no longer interested in attracting talent and ideas to our shores, or that those people already here, who contribute over £23bn to the UK economy each year, are no longer welcome. It should be saying the reverse."
Sound familiar” One of the main arguments against the government’s capital gains tax proposal was that it could prompt the people who help drive the UK economy forward to relocate to countries where the legislative environment is more conducive to business.
As the Supper Club founder Duncan Cheatle said when the new CGT plans were announced: “It’s easy for them to relocate.”