Strategy Bulletin  

20/07/2015

UK BUDGET – ALL CHANGE FOR THE NON-DOMICILED CLIENT

Summary of July 2015 Budget Changes

From April 2017:
  • UK resident non-domiciled individuals* (‘non-doms’) who have been in the UK for more than 15 of 20 tax years will no longer be able to claim the ‘remittance basis**’ tax treatment once this period has elapsed. They will subsequently pay UK tax on worldwide income and gains
  • Those with a UK domicile of origin*** will no longer be able to claim non-dom status if they return to the UK after a period overseas
  • Family homes worth under £1 million will be exempt from inheritance tax, if passed on by a couple. If the net estate exceeds £2 million, there will be no benefit from this change.

From April 2016:

  • Dividend tax rates will rise from April 2016 for those with more than £5000 of dividend income. Tax payable will be between 7.5% and 38.1%, depending on the payer’s income tax rate.

David Bell, senior wealth planner at Lombard Odier:

“The UK has many attractions for wealthy, mobile citizens, who contribute a huge amount to the economy through their specialist skills, the tax paid by their businesses, and the 45% levy many pay on their own earnings. The rule changes for ‘non-domiciled’ individuals show that the government is not courting wealthy, mobile individuals to improve the public finances. Eye-catching measures like raising the inheritance tax threshold on the family home speak instead to a desire to win votes from middle England.”

“Abolishing the permanent ‘non-dom’ status will make the UK less attractive for wealthy individuals, particularly in a competitive global market where many countries would welcome such tax payers.” 

“That said, the UK still offers a beneficial tax regime for such clients for 15 years. There are opportunities to restructure assets before this watershed. While some non doms will leave, many will stay and pay the additional tax for personal, family or business reasons. Meanwhile, volatility and insecurity in emerging markets will continue to drive wealthy clients from around the world to the safety of London. The city has few competitors as a financial and transport hub, a location for educating children and enjoying a vibrant social and business life.”

 


*Typically individuals who live in the UK but who are from another country and intend to return there in the future.
**Being taxed on the remittance basis means an individual pays UK tax on income and capital gains that originate in the UK, but there is no tax on their global assets. Tax is only payable on income and capital gains from non-UK assets if this income or the proceeds of these gains are brought into the UK.
***UK law considers everyone to be domiciled in a particular country. For many people, their domicile would be what they regard as their home country. A person’s domicile of origin is normally the same as that of their father.

This marketing communication has been issued by Lombard Odier (Europe) S.A., a credit institution authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. It is provided for information purposes only. It does not constitute an offer or a recommendation to subscribe, to purchase, sell or hold any security or financial instrument. It contains the opinions of Lombard Odier, as at the date of issue. These opinions and the information herein contained do not take into account an individual’s specific circumstances, objectives, or needs. No representation is made that any investment or strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes a personal recommendation to any investor.

Important information – FACTUAL INFORMATION
This document is issued by Lombard Odier (Europe) S.A., a credit institution authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg. This communication has been approved for issue by each of its branches operating in the territories indicated at the bottom of this page (hereinafter "Lombard Odier"). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document is provided for information purposes only. It does not constitute an offer or a recommendation to subscribe to, purchase, sell or hold any security or financial instrument. The information herein contained does not take into account an individual’s specific circumstances, objectives, or needs. No representation is made that any investment or strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes a personal recommendation to any investor. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Lombard Odier does not provide tax advice. Therefore you must verify the above and all other information provided in the document or otherwise review it with your external tax advisors. Investments are subject to a variety of risks. Before entering into any transaction, an investor should consult his/her investment advisor and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. The information and analysis contained herein are based on sources considered to be reliable. However, Lombard Odier does not guarantee the timeliness, accuracy, or completeness of the information contained in this document, nor does it accept any liability for any loss or damage resulting from its use. All information and opinions as well as the prices, market valuations and calculations indicated herein may change without notice. Past performance is no guarantee of current or future returns, and the investor may receive back less than he invested. The investments mentioned in this document may carry risks that are difficult to quantify and integrate into an investment assessment. In general, products such as equities, bonds, securities lending, forex, or money market instruments bear risks, which are higher in the case of derivative, structured, and private equity products; these are aimed solely at investors who are able to understand their nature and characteristics and to and bear their associated risks. On request, Lombard Odier will be pleased to provide investors with more detailed information concerning risks associated with given instruments. The value of any investment in a currency other than the base currency of a portfolio is subject to the foreign exchange rates. These rates may fluctuate and adversely affect the value of the investment when it is realized and converted back into the investor’s base currency. The liquidity of an investment is subject to supply and demand. Some products may not have a well-established secondary market or in extreme market conditions may be difficult to value, resulting in price volatility and making it difficult to obtain a price to dispose of the asset. If opinions from financial analysts are contained herein, such analysts attest that all of the opinions expressed accurately reflect their personal views about any given instruments. In order to ensure their independence, financial analysts are expressly prohibited from owning any securities that belong to the research universe they cover. Lombard Odier may hold positions in securities as referred to in this document for and on behalf of its clients and/or such securities may be included in the portfolios of investment funds as managed by Lombard Odier or affiliated Group companies.

European Union Members: This document has been approved for issue by Lombard Odier (Europe) S.A., a credit institution authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg and by each of its branches operating in the following territories: Belgium: Lombard Odier (Europe) S.A. Luxembourg • Belgium branch, a credit institution regulated in Belgium by the Banque National de Belgique (BNB) and the Financial Services and Markets Authority (FSMA); France: Lombard Odier (Europe) S.A. Succursale en France, a credit institution and regulated in France by the Autorité de contrôle prudentiel et de résolution (ACPR) and by the Autorité des marchés financiers (AMF) in respect of its investment services activities. Netherlands: Lombard Odier (Europe) S.A. • Netherlands Branch, a credit institution regulated in the Netherlands by De Nederlansche Bank (DNB); Spain: Lombard Odier (Europe) S.A. • Sucursal en España, a credit institution regulated in Spain by the Banco de España and the Comisión Nacional del Mercado de Valores (CNMV); and United Kingdom: Lombard Odier (Europe) S.A. • UK Branch regulated in the UK by the Prudential Regulation Authority (PRA) and subject to limited regulation by the Financial Conduct Authority (‘FCA’) and the Prudential Regulation Authority (‘PRA’). Details of the extent of our authorisation and regulation by the PRA and regulation by the FCA are available from us on request. UK regulation for the protection of retail clients in the UK and the compensation available under the UK Financial Services Compensation Scheme does not apply in respect of any investment or services provided by an overseas person.

In addition, this document has also been approved for issue by the following entities domiciled within the European Union: France: Lombard Odier Gestion (France), an investment management company authorised (no. GP 01-011) and regulated by the AMF; Gibraltar: this document has been approved for issue by Lombard Odier & Cie (Gibraltar) Limited, a firm which is regulated and authorised by the Financial Services Commission, Gibraltar (FSC) to conduct banking and investment services business; Spain: Lombard Odier Gestión (España) S.G.I.I.C., S.A.U., an investment management Company authorised and regulated by the CNMV.

Switzerland: This document has been approved for issue in Switzerland by Bank Lombard Odier & Co Ltd Geneva, a bank and securities dealer authorized and regulated by the Swiss Financial Market Supervisory Authority (FINMA).

United States: Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income.

This document may not be reproduced (in whole or in part), transmitted, modified, or used for any public or commercial purpose without the prior written permission of Lombard Odier.

© 2015 Lombard Odier (Europe) S.A – all rights reserved

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