Foreign lawyers' tax breaks under threat in shake-up

Non-residents: rule changes to hit immigration specialists

Foreign lawyers working in the UK could see some of their tax advantages disappear under government proposals to change the tax rules applying to resident non-domiciles (RND), foreigners who live in Britain but are not registered as citizens.

Currently, RNDs in this country are exempt from income and capital gains tax on money generated abroad.

However, proposed changes to the rules would mean that any person who has lived in the UK for more than four years will become taxable here on worldwide income and gains, regardless of domicile.

Julia Onslow-Cole, head of business immigration at City firm CMS Cameron McKenna, said the changes would have an effect on foreign lawyers in this country.

However, she said: 'Although they will lose some tax breaks for their overseas income, most of their income comes from UK sources, and so will be taxed anyway.'

The rule changes will have a greater effect on immigration and private client lawyers who deal with wealthy clients wanting to work in this country, she argued.

'At the moment, the UK is something of a tax haven for high net-worth individuals,' she said.

'If the rules change, many of them will simply not want to come and work here, and it will be very detrimental for the economy in general.'

John Rhodes, head of the private client team at City firm Macfarlanes, agreed.

'At the moment, the presence of RNDs helps to maintain London's momentum as one of the world's major financial centres,' he said.

'If this issue is not handled properly, the country will stand to lose much more than it will gain.'

Victoria MacCallum