“I think that Brits abroad are perhaps even more concerned about coalitions than UK residents are,” said Paul Gambles, managing director of MBMG Group.
“For most UK residents there had been little exposure to coalitions prior to the current one, and I think this coalition has done very little to make them comfortable with the process.”
“Something odd”
The Tories have proposed restricting tax relief on pension contributions for those earning more than £150,000. But Jeremy Woodley, sales and marketing director at The Fry Group, said many clients already feel a squeeze between the lifetime allowance and the annual allowance.
“There is something odd in current pension policy anyway with a limit on the way in and way out, so effectively there is already a cap on relief,” he said.
“It would be much simpler to abolish the lifetime allowance and then just maintain the annual allowance at a level that provides a good opportunity to plan for retirement, without giving away too much.”
David Howell, chief executive of Guardian Wealth Management, said: “Tax relief has been reducing every year for far too long, and I think it would be unfair to reduce this further. I understand this policy aims to avoid providing relief at the top end of tax, but individuals will simply use means other than regulated pensions.”
“Other bona fide options”
Some advisers have claimed Labour’s proposal to abolish the non-dom status would be catastrophic for the UK and cost billions in lost revenue.
DeVere’s Nigel Green claimed this policy would impact many of the estimated seven million British expats around the world. “If a Labour government scraps the non-dom tax status, it can be reasonably assumed that British expats will no longer be able to change their UK domicile to a foreign one,” he said.
“Historically, some long–term expats have given up their UK domicile in order to legitimately reduce their tax burden, amongst other financial benefits.
“I recommend that if these plans go ahead, British expats should speak to a cross-border financial specialist about the myriad of other bona fide options that allow these individuals to use their expat status to their financial advantage.”
“Tipping point”
Labour has also proposed returning the top rate of tax to 50%, which advisers said is unlikely to be popular. “Super tax just leads to more innovative tax planning; a good financial planner will be looking to arrange their clients’ affairs in the most tax efficient way possible,” said Howell.
Managing director at Mark Dean Wealth Management Dean Mullaly, said there is “a tipping point with taxes, where anything higher than 40% and people come up with clever ways not to pay it”, meaning the 50% rate would actually lead to less tax being collected.
“Ill-thought through”
The party’s ‘mansion tax’ on properties worth more than £2m was also criticised by advisers, with Charles Hallett, managing partner at Cignet Capital Management, suggesting this “ill-thought through mansion tax policy” has the potential to destabilise the top end of the market where there are around 97,000 properties in London valued at £2m or more.
This, he said, would be further exacerbated by Labour’s intention to implement a 50p income tax rate, as wealthy overseas buyers and top earners would decide to leave the country for other European countries.
“Most independent observers agree that it is the chronic supply-demand imbalance that is driving up mainstream house prices – not overseas buyers,” said Hallett. “These policies do nothing to address this fundamental core issue.”
The Lib Dems have proposed ending the ability to inherit non-dom status and increase charges. Howell suggested stopping people from being able to choose a domicile status for tax purposes was the right thing to do, despite the fact that limiting the tax savings offered to non-domiciles would not be beneficial from a financial planning perspective.
“Tax cash cows”
Advisers claim that the parties fail to represent expat interests. “All parties will see expats as tax cash cows to be squeezed harder”, said Paul Gambles.
AAM Advisory’s Ian Black said: “The increasingly hysterical approach to ‘tax dodgers’ which includes many tried and tested, and previously non contentious, planning tools much used by ordinary investors raises serious questions about what the next step will be in the taxation of expatriates and non-doms.”
While David Halley, managing director at Capstone Financial, said policies which increase tax would have a negative impact on the UK economy. “All the major parties seem to be hopping onto the populist bandwagon against higher rate tax payers and foreigners, whether non-dom or property investors,” he said.
“Creating a perception that the UK is now becoming hostile to foreign capital could reverse the capital flows.”
