Offshore mortgage blow for non-doms

Wealthy foreigners living in the UK could lose a 40% saving on their mortgage costs following the crackdown on non-dom tax rules.

According to the FT it was revealed at a meeting with a senior HM Revenue & Customs official that offshore mortgages would be caught by reforms to non-dom rules.

Banks are said to be shocked by the revelations, as they thought mortgages held offshore would not be affected by the non-dom changes.

'For people in the City, using a foreign bank account branch is a standard and typical way of funding their properties in the UK,' said Ernst & Young tax partner Andrew Tailby-Faulkes.

Non-doms benefit from offshore mortgages as the off-shore income used to pay the loan is not taxed at a 40% rate, as money does not come into the UK.

Non-doms are now waiting to see if the taxman will target offshore mortgages already in existence. Lobbying on the issue is set to continue until the Budget.

The Treasury said it was determined to close loopholes in the current rules that allowed foreign income to be remitted to the UK without being taxed.

Further reading:

City banks hit by non-dom chaos

Darling denies pleas for non-dom delay