Much has been said on the financial implications of non-doms leaving the country due to punitive taxes, but less attentions has been paid to the personal and family consequences of such moves, says Cara Nutall
Prime Minister Keir Starmer has stated that “painful” decisions are unavoidable to repair the UK’s economic damage and has asked the public to “accept short-term pain for long-term good”. While VAT on private school fees has already been confirmed, we’ll have to wait until the October 30 Budget for confirmation of other changes to the non-dom tax regime.
The expected changes around tax, due to be announced in the Budget, have unsurprisingly caused apprehension among high-net-worth individuals, with reports of some fleeing, or planning to flee, the UK ahead of the announcement.
While much has been said on the financial implications, there has been significantly less attention paid to the personal or family consequences of such moves.
The high price of relocation
Divorce is one of the most common and costly issues that can arise after a move abroad. We see couples for whom the move has proved either the catalyst for the breakdown of the relationship, or has made it significantly more complicated to resolve the issues that arise from it.
Moving house is already considered one of life’s most stressful events, and the added pressure of adapting to a new culture and lifestyle can contribute to relationship breakdowns, with disagreements as to whether to stay or return home common.
Despite this, there is no process whereby a divorce is dealt with as an “international divorce” for non-doms, it must take place under the rules of one jurisdiction.
Courts in most countries have strict rules as to when they can or will, entertain a family law case. As a result, people may find themselves inadvertently removed from the ‘protection’ of the English court, into an alternative system with different starting principles and approaches.
In these cases it can be a costly and lengthy process to determine where the proceedings should take place, before the question of how financial or children issues themselves can be addressed.
Couples may also find that wealth protection measures, like pre-nuptial agreements, don’t have the same standing or efficacy as the country they were prepared in. People should not assume such protections automatically retain the same status, once in a new jurisdiction.
Child arrangements and the threat of abduction
If after moving abroad one partner wishes to return home, complexities concerning child arrangements may be inevitable. It is easy to assume that as a parent, if you want to come home with your child, you can, or that in the event of a dispute, the English court will consider the arrangements for a child born and previously raised in the UK, however often this isn’t the case.
Relocation applications, conflict over jurisdiction and habitual residence, and cross-border enforcement of orders are just a handful of challenges parents may face. Non-doms must also consider the differences of joint or full child arrangements between countries and the potential impact if one partner wants to return to their home country in the future.
Where parents can’t come to an agreement, child abduction may become a reality. If a parent moves a child abroad without the consent of the other parent it often constitutes child abduction, even if they are both legal parents or guardians, and the court will intervene – in some cases it can also constitute a criminal offence.
Family should come first
It is inevitable that with the imminent seismic tax consequences, October will likely see some pinch points for non-doms, but finance isn’t the only ‘F’ to consider.
If a move abroad is primarily driven by tax advantages, non-doms must face the reality that the potential family and legal challenges ahead might outweigh any financial gains. As such, anyone contemplating a relocation should seek guidance from legal and financial advisors including family law specialists, with experience in relocating abroad when planning a move, to ensure they’re protecting their family and not just their finances.
Cara Nuttall, Head of Family Law at Brabners Personal