17 June 2008: UK remains best place to be an RND: and the industry is responding quickly to the changes

Barclays Wealth today announces the results of the first formal research study into the attitudes and views of the UK’s Resident Non Domicile (RND) community since the revised Government budget proposals came into effect on April 5th 2008.

The research, commissioned by Barclays Wealth and conducted by wealth management strategists Scorpio Partnership, canvassed the view of  leading advisers to RNDs in the UK, including Barclays Wealth, five leading private client accountants and eleven leading law firms. The firms are estimated to have advised at least 50% of the UK's RND population.

The research reveals that fears of a brain drain are probably over exaggerated.   The events of the last few months have altered RND's attitudes to the UK but overall they recognise that it remains the best place to be in the world with RND status. The following reasons were given:

• City workers and professionals are here because of their employment and the opportunities in the UK which are hard to duplicate so no mass exodus is foreseen at present
• RNDs are on the ball and despite the rapid implementation of the new rules which came into force on April 5, the majority of the RND community have adapted quickly to the fixed charge concept
• Lifestyle – RNDs are unwilling to leave the UK solely for tax reasons. There are more practical considerations to be taken into account, including the education of children, culture and London’s ambience as one of the world’s great cities
• RNDs’ advisers who have international networks and unrivalled knowledge of international jurisdictions are still advising that, from a purely financial perspective, the UK remains, on balance, one of the best places in the world to be an RND
• For the moment, London retains a critical mass of hedge fund managers and financiers.  However, these professionals have a 'domino' mentality and are highly mobile, so this situation could change rapidly if only a small proportion of them elect to leave
• Ironically, current uncertainties surrounding the UK property market are playing a role in RNDs not leaving the UK permanently; with the community being anxious not to sell up at a time when the best price might not be achieved on what has always been viewed by them as a long-term investment

Commenting on the findings, Peter Horrell, Managing Director, Barclays Wealth Intermediaries, said:  "The advisory community to the UK RNDs has shown that it is evidently on top of the impact of the changes and is well placed to make suitable response recommendations to those wishing to retain RND status or those coming into the UK as RNDs for the first time.  However, while RNDs have absorbed the shock and accepted the impact of new tax rules remarkably quickly, these changes have underlined the importance for RNDs to have access to informed advice and guidance so they can gain clarity on how the changes affect them and plan accordingly. 

“At Barclays Wealth we have seen a sharp uplift in engagement with the RND community since the changes were first mooted and the messages  in this research mirror our own client feedback.  The decision process for  non-domicile international professionals is more complex than previously as they now have to think a little harder about whether to move to, or remain in, the UK – but once they have clarity on the impact of these changes and how they affect them, they are able to realise the many other benefits of living in the UK.”

Cameron Fowler, Managing Director of Barclays Wealth International added, “The messages in this research are clear and are in line with our own client feedback. There is no doubt that the non-domicile international professionals are now having to think a little harder about the decision to move to, or remain in, the UK – but the good news is that most still seem to think the UK is the place to be.”

Mr Fowler also confirmed that since the Government changes Barclays Wealth has seen a sharp uplift in engagement with the RND community. “There are a number of factors that affect an individual’s decision to come or to stay. What we are finding is that once the impact of the regulatory changes is clearly explained, the many additional benefits of living in the UK come to the fore.”

The attractions of the RND to the UK mean that there is no reason for wealth advisers to recommend RNDs move elsewhere immediately.  However, this is driving changes in the financial solutions demanded by clients.

In terms of changes to planning strategy, most of the focus of private client advisers is on more sophisticated tax structuring. People are looking at structures other than commonly used ones like trusts. These include limited liability partnerships for family succession planning, and sophisticated insurance policies, or “wrappers”, which can be used to optimise income and capital gains.

While the complexities of the latest changes to the UK's regime for RNDs have made the appointment of wealth advisers essential, it has become equally important for the advisory community to distinguish between RNDs who are prioritising their financial situation and those who are prioritising their lifestyle as an important guiding factor in the planning and decision making process.

For further information:
Caroline Wells, Barclays Wealth 020 7114 9813
Nicola Hankey, Barclays Wealth 020 7114 7435