The Government has bowed to lobbying from the financial services industry in promising to offer a tax exemption on non-dom legislation to stop businesses moving their operations abroad.
Tax experts and industry groups had warned money brought onshore to the UK by non-doms would be liable to tax under existing proposals.
They cautioned financial services, such as financial advisers, private banks and investment companies, could move parts of their businesses offshore to remain competitive.
But sources say banking groups including the BBA, CBI and London Investment Banking Association were reassured by the Treasury this week that amendments will be made to the upcoming Finance Bill.
Speaking in this week’s International Money Marketing, Grant Thornton senior tax partner Mike Warburton warned financial advisers could also be hit by the tax changes.
Warburton said adviser firms could follow private banks abroad to service clients unwilling to bring money onshore. He said: “Banks are a service industry and will follow the customer. If customers decide to base themselves permanently in Geneva, then that is where they have to be.”
He added: “Although it may not be as important for them to be physically close, advisers might well do the same.”
A spokesperson for the Treasury says amendments will ensure financial advice will be eligible for the tax exemption. He says: “Some of the clauses could have had a consequence in the way they define services so that financial advice on the management of offshore assets could be treated as a remittance for tax purposes. We are reassuring that it was never the intention that it would have that effect.”
A spokesperson for the BBA says: “The UK is one of the biggest financial centres in the world and it is not in anyone’s interest to see business go elsewhere. We welcome the reassurance they are giving us and look forward to working with them on this.”