The need for UK financial planners for the non-dom population is greater than ever before, according to Andrew Dixon, head of wealth planning at SG Kleinwort Hambros.
Speaking to FT Adviser, Dixon discussed how the abolishment of the non-dom tax status in the UK is going to affect HNWIs and the vital role financial planners will play in helping them to navigate the changes.
Dixon said there was going to be more need for financial planners following chancellor Jeremy Hunt’s decision to scrap the tax.
He said: “Resident non-doms are going to need the expertise of a UK financial planner more than ever, but also UK financial planners will need to be sufficiently versed in what the old non-dom regime was and what the new one will be because these people are going to straddle both.”
Dixon pointed out financial planners will need to upskill themselves as the demand for their services from non-doms will grow.
He added: “There isn't a huge population of planners who can deal with resident non-doms and so they need to upskill themselves on the history of the regime and how it's going to impact all those people who are going to straddle both regimes.
“They must make sure any planning done from a UK perspective is also paying respect to the money that's based on the old regime that hasn't been ported over to the new one via transitional relief,” he added.
Dixon warned it would be very easy for financial planners to get caught out when advising clients if they do not grasp an understanding of how the tax regime used to work.
He said: “I have witnessed planners from other organisations giving advice where from a UK perspective it makes sense but then not understanding the implications from an offshore perspective.
“While some resident non-doms in the past did seek the help of an adviser or financial planner, the majority didn’t because they had a tax adviser dealing with it all but now there is going to be a call for planners to be involved with these clients.”
Dixon explained planning for non-doms previously was well understood but now with the changes announced, he said non-doms will need to switch to another form of planning which included having an individual UK plan.
“HNW non-doms will need to think in the same way UK HNW nationals would be thinking about planning. These individuals will need to think about whether they want to be generating lots of income in their personal name when it’s going to be taxed at 45 per cent.
“They will have to think about whether they should skew their investment to more capital gains or to an investment where the tax rate is lower, as well as think about inheritance tax. All of the things a UK person would think about, they will now also have to consider,” he added.
