In just under a month, on 4 July 2024, the country will go to the polls and vote for the next government in a General Election. While the two main parties will spend much of the intervening period setting out their stall and highlighting key policy points on various issues, there is a real risk that the forthcoming changes to the non-dom taxation regime (which both the Conservatives and Labour have confirmed they will introduce, but in slightly different guises) will remain up in the air, with numerous areas of detail still unclear. In an already uncertain geopolitical and macroeconomic climate, where does this leave non-dom clients and their advisers and what, if anything, can be done at this stage?

Before the election was called on 22 May, we (along with many other advisers) were gearing up to participate in a series of “listening events” being hosted by HMRC, with the aim of enabling the governing party to hear key stakeholders’ views on the proposed reforms. However, these events (at least those scheduled to take place after the announcement) were cancelled, which is a shame given the apparent lack of formal consultation which is likely to take place ahead of the broader non-dom changes (although there will apparently be a consultation on the proposed inheritance tax changes). An opportunity for HMRC to understand the views of stakeholders and report them to whichever political party forms the next government would presumably only have been helpful in forming a more complete picture of the likely behavioural effect of the proposals on non-doms, and ensuring draft legislation is as fit for purpose as possible.

The draft legislation, which we had hoped to see this month, will not now be published this side of the election. As Parliament has now been dissolved, we can at least state with certainty that the Conservatives will not be able to bring any version of their proposals into force before the election.

If there is good news to be found, it is that, from 5 July 2024, we will at least know which party’s version of the changes will become law (even if we can’t yet say what further changes those proposals may go through). So, although we are currently in a less certain position because the promised draft legislation will not be made available this month, we have at least written off the possibility that the current Conservative government might rush through a version of the proposals in time for 6 April 2025, only for Labour to immediately change them (either with effect from the same date, or a year later). We should only get one set of rules.

However, non-doms would be sensible not to wait until the election results are in before starting to act. We know that these changes are coming irrespective of which party wins in July and I believe that both parties have fiscal pressure to bring them in with effect from 6 April 2025 if possible – they have both already committed the anticipated tax take for the next tax year, so will not want an unfunded expenditure if at all possible. Non-doms and their advisers should therefore continue to take stock of their position and get their affairs in order so that they are in a position to act rapidly once the detail of the changes has been finalised by the new government.

Although not an exhaustive list, non-doms should:

1. Consider their short-, medium- and long-term plans.  How long would they ideally spend in the UK, what are the potential tax implications and are they acceptable?  What level of capital will be needed in the UK to fund this? What preparations can be made?
    
2. Look back at previous years’ residence position – how many tax years will they already have spent in the UK (continuously or discontinuously) by 5 April 2025?
    
3. Get key advisers (lawyers, accountants, investment managers) familiarised with their position and asset base.
    
4. Consider assets – what are they, are they liquid or illiquid, when were they acquired, where are they situated, are they standing at a gain?  An initial conversation about which assets may be suitable for re-basing (depending on the final legislation) would be helpful.
    
5. Undertake an initial rough calculation of how much they might want to bring to the UK under the proposed Temporary Repatriation Facility.
    
6. Consider any trust structures – what is in them (with the same key questions as set out in point 4 above), who are the beneficiaries and where are they resident? 

The list above is a high level, generic set of questions, but non-doms typically have complex fact patterns and so tailored advice will be invaluable. Involving professional advisers at this stage will put non-doms in the best possible position to act once the detail of the changes has been confirmed.