Reeves’ Finance Act Opens Door to Retroactive Taxation of Non-Doms – Guido Fawkes

Reeves’ Finance Act Opens Door to Retroactive Taxation of Non-Doms

mdi-fullscreen

The Adam Smith Institute’s new report into Reeves’ 2025 Finance Act – which will remove the historic non-dom status – concludes that remaining non-doms could be forced to pay a whopping 67% on the profits of foreign businesses. That’s thanks to a 45% rate on profits accompanied by a 39.5% dividend tax rate in addition to full UK personal taxation. It gets worse…

The report highlights that the bill as written puts new UK residents at risk of Loan-Charge-style retroactive taxation. This could in theory be levied on capital gains made prior to becoming a UK resident. The taxman has previously disapplied historic tax reliefs for capital gains in high-profile aggressive cases against taxpayers who it claims are unfairly avoiding tax. Non-doms will be brought into a regime which may pursue gains on assets they made prior to becoming a UK tax resident. The favourable three-year tax rates provided by Reeves will do nothing to stop this…

The Society of Trust and Estate Practitioners warns on avoidance rules that “taxpayers who have never had anything to do with the UK can, on becoming UK-resident, be taxed by reference to gains that arose at a time when they never had any intention of becoming UK-resident and where the non-UK structure had no UK connections.” This means, for example, that historic gains from a trust outside the UK will become open to taxation upon a beneficiary becoming UK tax resident. There are no specific protections from this in the upcoming Finance Act…

Reeves then is saying: “Come to Britain and we may tax you retrospectively.” There is either way a high degree of uncertainty in the bill. Wealthy individuals are more likely to run a mile than become UK tax residents…