So as we all now know, in a historic referendum the UK has voted with its feet and decided to leave the EU.
Regardless of how any of us voted, the decision has been made and the UK must now move on and hopefully we can prosper from our new arrangments, though it’s going to take some time.
A large part of my client base consists of talented EU citizens who contribute a huge amount to the UK, the world’s 5th largest economy, and London’s role as a global financial capital, together with other non-EU citizens who have benefited greatly from the UK’s membership of the EU.
Hopefully this result will not have any immediate personal impact on their circumstances, however I still expect many clients will be concerned with the outcome of the referendum.
Since the result was known (and at the time of writing this email on Friday) the pound has suffered its biggest one-day fall in history, losing 10% against the dollar and at levels not seen since 1985. We have also seen the markets crash on opening, with the FTSE dropping over 8%.
Hopefully these are just knee jerk reactions and things will level out but only time will tell.
What will happen over the long term and these next couple of years as we ‘divorce’ ourselves from the EU is impossible for anyone to predict. So, what else the Brexit has in store for the UK is just speculation for now.
Of course, an important question to ask is ‘will this mean that taxes will rise?’
The conservatives promised not to raise taxes in the last election, however George Osborne when on the Remain campaign trail warned of increases of 2p on the basic rate of tax (currently 20p) and 3p on the higher rate of tax (currently 40p). He also said IHT might rise by 5p from its current rate of 40p.
I personally find it difficult to believe that any elected Government which wants to be re-elected will introduce these hikes to our taxes.
Following the pending resignation of David Cameron later this year, I would expect our new leader to counter the threats made by Osborne with a promise not to increase income taxrates in order to gain some favour with the public. We will have to wait and see of course and this just is further speculation!
Our Non-Dom clients will also wonder whether this effects reforms to the taxation of non-domiciled UK tax residents announced in the Summer Budget 2015. It has been suggested that the government will have other priorities in the coming months and that the planned reforms will get postponed or even dropped. Our advice at this stage is to continue to plan on the basis that the proposed reforms will come into force, although it will be good news if they don’t!
These are just my initial thoughts, but if you have any immediate concerns please do not hesitate to contact myself or one of our team.
All views and opinions expressed in the blogs are personal to the writer and may not necessarily be shared by everyone at TAP but our clients are always welcome to put forward alternative views and questions which we will endeavour to share via future blogs, where appropriate.