top of page
Search
  • Writer's pictureDavid Bojan

What Does the UK General Election Mean for Non-Doms?

Voters in the UK will head to polls on the 4th of July after PM Rishi Sunak announced

the date recently amid sluggish growth, high interest rates and cost-of-living

headwinds. Read on to discover what this means for non-doms below.


Houses of Parliment

Tax cuts are set to be central to Conservative pledge on election trail despite warnings of

stress on public services.


Labour pledges have a focus on housebuilding, the NHS, a green deal, and

renationalising transport services.


Although some of the more severe headwinds have eased, the Conservatives will go into

this election facing an electorate still struggling with the cost of living.


Inflation has come down towards target, but it has disappointingly missed forecasts, which means prospects for an interest rate cut have been pushed further into the distance. House

prices have started creeping up again, amid supply shortages in key parts of the country,

which means that getting onto the housing ladder is still unaffordable for many young people.


This is while others face the daunting prospect of remortgaging at much higher rates

and tenants are watching rents climb at super painful rates. Growth forecasts have been

upgraded for the UK this year by the IMF this week, from 0.5 to 0.7%, but it’s hardly

shooting the lights out.



The Chancellor has pledged to cut personal taxes further, with more tinkering with National

Insurance looking likely, to try and stimulate growth. The latest public sector borrowing

snapshot arguably offers the government even less wiggle room to bestow treats on

voters.


Borrowing in April totalled £20.5 billion, above the forecast of the Office for

Budget Responsibility and overall borrowing for the year was revised upwards. It seems

further tax cuts would come at the expense of public services. Already current government spending plans would involve a large cut to departmental budgets over the rest of the decade to meet the government’s own fiscal rules.


We are sceptical that we will see any major changes with effect from April 2025 - the

new Labour government may not wish to be driven by the Tories' timetable and, quite

rightly, will wish to take their path at their own pace.


How Will the General Election Affect Investments?


Coins on laptop with invest sticky note

The polls indicate a significant lead for Labour. Volatility in the stock market around

election time is expected, but historical trends show eventual stabilisation.


However, uncertainty is the stock market's greatest enemy. Historically, the market thrives when it anticipates a clear winner in an upcoming election.


This was evident in 1997, with the market experiencing growth before, during, and after Labour's widely expected victory. Economic factors such as inflation and interest rates influence market returns more than election returns.


Will there be changes to pensions?


Both parties commit to retaining the state pension triple lock, ensuring it rises with the

highest of inflation, earnings growth or 2.5%.


Labour plans to reintroduce the lifetime allowance for pensions, potentially affecting

savers with large pension pots. This is adding further complexity to a topic that needs to

be simplified. Whichever party gets in may accelerate planned increases in the state pension age.


How will ISAs be affected?


Labour aims to simplify the ISA landscape and the proposed UK ISA by the

Conservatives is criticised as complex and unlikely to achieve its intended goal.


Tax Britain’s tax burden is the highest since World War Two.


Debate surrounds the tax burden, with the Conservatives aiming to reduce social

security contributions while Labour proposes VAT on private school fees and taxation of

overseas income.


What Does the General Election Mean for Non-Doms?


View of the Thames and London Bridge

The Labour Party first proposed to abolish the non-domiciled tax status, a system

allowing wealthy foreigners living in the UK to avoid paying taxes on overseas income

and gains.


However, the government announced plans to end non-dom tax status in the Spring

Budget 2024, requiring non-doms to pay taxes after four years. Labour supports this

move but intends to further close inheritance tax loopholes for non-doms, emphasizing

the importance of tax fairness and discouraging tax evasion.


But the Finance (No 2) Bill was scrutinised by the Public Bills Committee on 21 May, and

it was anticipated it would pass that committee by 24 May. It then must go to the report

stage and 3rd reading in the House of Commons, before heading to the House of Lords

to be voted on. However, due to the announcement of the election, the UK Parliament is now likely to be dissolved by 30 May.


That means that anything controversial within the Budget that could get 'stuck' in the House of Lords may now end up getting removed from the Bill to ensure that the

necessities of the Bill become statute before Parliament rises. It will then be for the new

Government to re-introduce the legislation (if they so choose) in a new Finance (No 3)

Bill.


Need advice?


Get in touch with one of our expert financial advisors or discover our other financial advice articles.

3 views0 comments

Yorumlar


bottom of page