Guernsey: Every Threat Hides An Opportunity

Last Updated: 26 January 2009
Article by Jon Needham

Most Read Contributor in Guernsey, September 2018

Originally published in Private Client Practitioner, Guernsey supplement, November 2008

Almost a year has passed since changes to the taxation of non-doms were first announced. These caused great concern in the private client industry. Jon Needham of SG Hambros looks back on the changes and how they have effected business in Guernsey.

Coincidentally it has now been almost a year since the 2008 pre-Budget report was published, which contained a fundamental change in approach by the UK government to the taxation of individuals who are resident but not domiciled in the United Kingdom.

The subject of domicile is solely a UK concept and I have to say, it is confusing to just about everyone. There are residency, tax residency, domicile and passport and none of them necessarily have to be the same. A little different to the US approach where once an American always an American, wherever you live and you are taxed accordingly (not that I am a proponent of this approach!). However, one has to admit that there is a lot to be said for the simplicity of the approach.

Thatcher and the non-doms

Turning back to the UK, the issue in respect of that eclectic group that have colloquially become known as "non-doms" in professional circles is nothing new. This issue was first flagged, believe it or not, in the early nineties by none other than

Margaret Thatcher, now Baroness Thatcher. Yes, the definition of the modern capitalist and creator of an economic model premised on low tax for the rich was in fact making the point that there was an inequitable treatment between UK domiciled individuals and those that were non-domiciled.

At the time this was met with a huge furore. The arguments that were applied, "bad for the City," "bad for the UK economy," "they will move somewhere else more accommodating" were the same ones used in 2008. The only difference in the early 90s was that the counter arguments were indeed listened to and the effect of the City of London and the wider economy i.e. employment, invisible earnings and indirect taxation were fully taken into account.

One of the most significant lobby groups at the time was the London based Greek ship-owners, some of whom had origins dating back well before the First World War but who clearly made a significant contribution to, not only the City but also to indirect taxation and employment. This both reinforced and upheld London's position as a pre-eminent centre of expertise for the world's commercial fleet and shipping more generally.

Whatever the rights and wrongs, not all of these arguments were listened to in 2008 and during the consultation period it became clear that there was a real lack of understanding of the salient issues. This culminated in a lengthy dialogue between the UK Government, HMRC and the UK financial services industry. Unfortunately many of the arguments put forward in the early nineties were simply dismissed (despite still having some validity) and eventually after some redrafting and a few "u-turns," the new regime came into force.

Simplistically, non-doms can now choose to be taxed on their worldwide income or retain the ability to be taxed on a remittance basis. The first option has a cost in terms of tax and with the second there is effectively an annual membership fee of £30,000 per annum, subject to passing a residential qualification test of 7 out of the last 9 years. One also has to make a positive election as to the basis on which one wishes to be taxed.

There are a number of other measures which need to be considered but which are too complicated to cover here.

Effect on Guernsey

So what has the effect been on the Channel Islands and Guernsey, in particular? The private client industry has endured these external pressures for some considerable time, arguably since Mrs Thatcher first mooted the idea of this change in the early 90s and as with any change "forewarned is forearmed." In other words we did have some considerable time to get used to the idea and have clearly faced a number of other threats in the intervening period from the EU and OECD to name but two.

That being said, the changes introduced last year have clearly impacted Guernsey and other Crown dependencies and whilst the full impact is yet to be seen, we have already seen some noticeable changes.

Firstly, a number of client structures became redundant as a result of the proposed changes. This was not necessarily because the planning behind the structure had become ineffective but more that the cost–benefit argument was either negative for the client, or at best increasingly marginal. As a result, most trust businesses would have experienced a net outflow of clients over this period, although from our experience at SG Hambros, this tended to be more towards the low value end. In an environment where resources are finite, this enforced re-balancing of the book was not necessarily unwelcome.

Secondly, Island authorities saw an increased interest from wealthy UK resident and UK resident non-domiciled individuals who were considering moving out of the UK and looking to Guernsey as a potential future home. This is clearly of benefit to the local economy and, I suspect, the full cost to the UK in terms of the numbers who have actually left and the true financial impact has yet to be fully measured.

A fall in business?

Looking forward, the acid test for the industry is "have the changes led to a drop in new business?"

Clearly, I can only comment from the SG Hambros perspective and I have to say that we have been pleasantly surprised by the results. Since the changes came into effect our private client business has continued to flourish. Indeed in the first six months of 2008, we booked more new business than we did in the whole of 2007.

Admittedly this is not all in relation to UK resident non-domiciled individuals (but some was) but then this was never the case in any event as our business today is more diverse and has a greater global reach than even 5 or 10 years ago.

The positive side of this is that the Island's finance industry, along with those of other Crown dependencies, continues to show remarkable resilience and an uncanny knack of being able to reposition and at times re-invent itself. This is a testament to the quality of our industry, the legislative and regulatory framework and the quality of the resources we have at our disposal.

Importantly, the UK remains attractive to the seriously wealthy and from our experience, whilst the tax environment is a key factor, it is not the sole consideration. Increasingly we are finding that tax holds only a modest position in most clients' "batting order" as they acknowledge that as with anything else there is a price to pay.

As one client said to me: "£30,000 is not that bad – where I come from I pay that for my golf club". This is not a glib comment but I guess this puts this whole topic in perspective when considered in the context of the wealth that many have at their disposal.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions