UK budget’s non-dom changes could reduce appeal of the island

However, one local tax expert felt there was too much uncertainty as yet to be sure of the impact.

Among the items revealed by Chancellor Jeremy Hunt was a change to the taxation of non-domiciled individuals – known as non-doms – in the UK.

While at the moment these people can make a claim so that they pay tax on foreign income and gains remitted to the UK for up to 15 years, from April next year, this will change so that they will not be subject to this tax for only the first four years of their residency in the UK.

‘These provisions will obviously weaken the attractions of the offshore jurisdictions,’ said Advocate Raymond Ashton of Ashton & Co.

Head of tax technical at LTS Tax Mandy Connolly said that the change to non-dom status was a big one.

‘It will impact people quite considerably,’ she said.

On top of that, the possible changes to inheritance tax in the UK could have ramifications, too.

A consultation on inheritance tax is due to take place which could lead to a change which will see UK residents becoming subject to the tax on their worldwide assets.

‘The devil will be in the detail,’ said Mrs Connolly.

But if people in the UK find themselves taxed on more than they were previously, that could see them looking to move.

‘The impact will depend on each person’s circumstances.’

Advocate Ashton added that there was a third element that might have ramifications.

‘There are to be adverse changes to the protected trust regime which was introduced in April 2017 and which will cease from April 2025 is a further blow,’ he said.

But he could see some positives.

‘The freezing of allowances means that taxation will increase, and coupled with a possible Labour government, this should stimulate the demand for open market houses by UK residents seeking to escape the increased burden of UK taxation.’

Tax expert Graham Parrott said that once the non-dom changes went through, some UK residents might look to leave and they could end up looking to live in Malta or Italy, which have their own non-dom tax status.

But like Mrs Connolly he thought the inheritance tax change could have an impact ­– if it was to come in, and once its workings are revealed. With a UK election due this year and a significant chance of a Labour government, Mr Parrott said there were a lot of uncertainties.

‘I’m not convinced the changes are going to be a major problem but nor do I see a cause for excitement,’ he said.

‘At the end of the day I wonder if it will end up being fairly neutral as far as Guernsey is concerned.’