Accountants are encouraging their wealthy non-domiciled clients in Britain to splash out on new cars, yachts, rare books, private jets and furniture to avoid paying 40% on items valued at more than £1000 purchased with foreign income after April 5.

‘The new rule going forward is the new asset will be taxable on what it cost you if it is not in the country by midnight on April 5,' Patrick Stevens, Ernst & Young partner, told the Financial Times.

The small print of the 2008 Budget says ‘any asset purchased out of untaxed relevant foreign income which an individual owned on the 11th of March 2008 will be exempt from a charge under the remittance basis, for so long as that individual owns it, even if that asset is currently outside the UK and later imported’.

But accountants revealed the downturn in the markets had dampened the interest in spending money – their clients were more concerned about getting their overall affairs in order before April 5 than increasing their luxury items.

Further reading:

Time for bravery, not caution

Budget letter attempts to lift non-dom blues

Read story in the Financial Times