Latest news with #nonDomTax
Telegraph
6 hours ago
- Business
- Telegraph
Labour's next reversal must be on non-doms before it's too late
The abolition of the non-dom tax regime could turn out to be the worst decision taken in Rachel Reeves's first Budget. The Chancellor was convinced that few of the 83,000 foreign entrepreneurs and investors would leave the UK after its abolition and that they would still contribute £12bn in taxes over the course of the parliament. The reality is turning out to be starkly different. Non-doms are leaving in their thousands, and taking their tax contributions, investments and potential to create jobs with them. The latest report into the abolition of non-dom status by a former Treasury economist found that more than 10pc of non-doms have already left the UK. This follows analysis from the Centre for Economics and Business Research (CEBR) that found that once 25pc of non-doms have departed, the policy will end up actually costing the Treasury money. Tax advisers are predicting that 40pc, possibly more, of non-doms will leave the country. This will have a huge impact on our public finances, leaving the Chancellor with a multibillion-pound shortfall in tax receipts, which every other taxpayer will have to pick up. While Britain is showing these highly productive people the door, other countries are rolling out the tax red carpet. Italy recently introduced a flat tax regime for foreign investors, allowing them to pay a fixed annual payment of €200,000 (£170,000). In Greece, they are charged a flat annual tax of €100,000 if they invest in the country. America is planning to expand its golden visa programme and the UAE has built one of the world's fastest growing and dynamic economies by fostering an exceptionally welcoming environment for international entrepreneurs. As an entrepreneur with investors and clients based internationally, I am acutely aware of how this policy is damaging the UK's standing. Britain has huge advantages that can attract the world's best entrepreneurs to come here, especially our outstanding schools and universities. But the message I hear constantly from those affected by this tax change is that the UK is not somewhere that welcomes them. That perception urgently needs to be addressed. Despite the prevailing narrative that they are not paying their fair share, the somewhat inconvenient facts are very different. Non-doms currently contribute disproportionately to public finances. In 2022-23, the average non-dom paid 21 times more income tax than the median UK worker. They are not just taxpayers, they are economic catalysts. They build businesses, invest in start-ups, create jobs and contribute to philanthropic causes – hospitals, the arts, charities and even football clubs. Their financial footprint extends beyond income tax to VAT, capital gains tax and National Insurance. The CEBR estimates that in 2023 alone, this group generated £7.7bn in total revenue across all tax types and consumer activity. It is unrealistic to expect the Chancellor to backtrack completely on what was a flagship policy, even considering the enormous economic harm it is causing. Another reversal would likely be too embarrassing after the welfare debacle this week. But there are practical steps she can take to ensure Britain has a competitive offer in comparison to other countries, while ensuring these individuals pay their fair share of tax. Two changes would send an important message that Britain wants entrepreneurs and investors here. First, altering the rules so non-doms do not have to pay inheritance tax (IHT) on all their worldwide assets. These are businesses or assets they built away from Britain and before they came here – not only is it excessive overreach, but it is the single most uncompetitive policy a government could implement in a modern highly fluid and global world. The Government should ensure that the value of non-UK assets accrued by non-doms before 2025 will not be included in future IHT assessments. Returning to the rules before this year that ensured these assets were not subject to tax is the crucial first step in winning back confidence in Britain. Second, the Government bodged a Budget measure it thought would attract non-domiciled people to stay - the temporary repatriation facility. This was supposed to enable them to bring all their worldwide capital into the UK at a preferential 12pc rate. The problem is that tax advisers are warning, understandably, that they fear the government will find a way to tax this capital at higher rates in the future – retrospectively. A simple amendment to the next Finance Bill could offer greater certainty and security, but without it, few foreign entrepreneurs will want to risk bringing their global assets into the UK. The real question is whether the UK wants to remain a hub for global capital and entrepreneurship, or whether it's prepared to watch that capital and the entire ecosystem that depends on it move elsewhere. If the Chancellor doesn't fix this issue fast, the question will not be 'how many are leaving?' but 'why would they ever return?'.
Times
a day ago
- Business
- Times
Why the super-rich are leaving Britain
Some of Britain's wealthiest are taking their money overseas, leaving ordinary taxpayers facing bigger bills, analysts have warned. An estimated 16,500 dollar millionaires are expected to leave the country this year — more than double China's projected exodus of 7,800. This would put the UK on top of the global rankings for millionaire departures for the first time in a decade, according to the wealth migration advice firm Henley & Partners. It says that a key catalyst has been the April overhaul of the centuries-old non-domicile tax regime. The previous system allowed an estimated 74,000 wealthy foreigners who live here (but are officially domiciled overseas) to shield their worldwide assets from British taxes for annual fees of £30,000 or £60,000. The new system requires non-doms living in Britain for more than four years to pay UK income and capital gains taxes on all their global earnings. Those here for a consecutive ten years before their death could find their worldwide assets subjected to the UK's 40 per cent rate of inheritance tax (IHT), one of the highest in the world. The government estimated that its non-dom rule changes would raise £12.7 billion for the Treasury over the next five years. However, the Centre for Economics and Business Research think tank said that if 25 per cent of non-dom taxpayers left the UK, the net gain to the Treasury would be zero. If half of them leave, revenues would drop an estimated £12.2 billion by 2030 — about £174 less to spend per person in the UK. Experts now fear that the chancellor, Rachel Reeves, will have no choice but to raise taxes in the autumn budget. This problem is illustrated by the so-called Laffer curve principle, which suggests that if taxes are too low the government misses out on revenue, but if they're too high people stop working or investing, ultimately causing tax income to fall. The theory is that there's a sweet spot where tax rates generate the most money for public services. Jason Hollands from the wealth manager Evelyn Partners said: 'While some will not shed a tear for wealthier people relocating overseas, I fear this is going to backfire for the Treasury and the jobs market.' Hollands points out that the Treasury is increasingly reliant on the wealthiest for tax revenue. In 1978-79, the top 1 per cent of earners paid 11 per cent of all income tax, according to the Institute for Fiscal Studies. This year, the top 1 per cent will pay about 29 per cent of all income tax. 'As high earners and asset owners up sticks, this will weigh heavily on tax receipts and inevitably the government will either have to confront the difficult choice of austerity or, more likely, an increase in taxes more broadly on the remaining population,' Hollands said. 'It is not just the tax receipts of wealthy people leaving the UK that will be missed — businesses and charities that benefit from their spending will be affected too. Gardeners, cooks, cleaners, restaurants, theatres, car showrooms, hotels and the property market will all suffer, undermining the jobs market.' This analysis comes after Reform UK this week proposed a Britannia Card scheme for non-doms. Wealthy foreigners would pay a one-off fee of £250,000 for a decade of tax-free foreign income and gains in the UK, plus exemption from IHT. The party leader, Nigel Farage, said fees would be earmarked for the lowest-earning 10 per cent of full-time workers, each estimated to get £600. 'The main reason I left was the tax ' Alexander Amosu, who grew up in Kilburn, northwest London, left the UK last year. The entrepreneur, who made about £9 million in the early Noughties from a mobile ringtone company, now lives in Dubai in the United Arab Emirates. Amosu, 50, owns and runs Lux Afrique, a concierge company, and Lux Afrique Boutique, an online platform that sells and delivers luxury goods to Africa. 'I'm very entrepreneurial and when you're in a market you want it to be supportive of you as a business person. Taxes were the main thing,' Amosu said. 'I'm thinking about selling my business in the next few years and I knew the tax liability I would face when I sold. I wanted to find somewhere that would be more complimentary to me as an entrepreneur.' Amosu pays himself an undisclosed salary from his company. In the UK he was in the additional rate tax bracket, paying 45 per cent income tax on anything he earned over £125,140. • In Dubai, he pays no income tax at all and there is also no corporation tax to pay. Local businesses pay 9 per cent in Dubai, but because Amosu runs an international company, the pays nothing. He knows he is not alone in making the move. 'Since I've been here, every week I'm meeting someone I know in Dubai. There's a massive exodus,' he said. 'The UK is losing talent. It is all people like me, who love the UK and want to stay — but it feels like the choice they are giving you means it is too hard to stay. Ultimately, it feels like we don't have a choice any more.' Why are they leaving? The escalating trend is stark: 9,500 dollar millionaires left the UK last year; 200 in 2023 and 1,600 in 2022, according to Henley & Partners. Critics point out, however, that the number leaving still represents a tiny proportion of the UK's estimated 3 million dollar millionaires. Marc Acheson from the wealth manager Utmost Wealth Solutions said: 'Unfortunately these numbers aren't surprising. Ever since the budget and the removal of the IHT protections on foreign assets, we have witnessed a significant flight of wealth, and we are still seeing many consider international options with increasing regularity.' The scale of departures is said to have prompted Reeves to consider reversing her policy, introduced in April, of subjecting non-doms to IHT. Other tax changes that have affected the wealthy include the freeze on income-tax thresholds which began in 2022 and will last until at least 2028. This means earners are paying more tax as their income increases and pulls them into higher tax bands. During the freeze, about two million people will move into the 45 per cent income tax band that applies on earnings above £125,141, according to HM Revenue & Customs estimates obtained by the wealth manager Quilter. Capital gains tax (CGT) and dividend tax allowances have also become far less generous. CGT is paid on gains made from shares and property and you used to get a tax-free annual allowance of £12,300. This dropped to £6,000 in 2023 then halved again to £3,000 last year. The dividend tax allowance for investors has shrunk from £5,000 in 2017 to £500 today. • Wealthy should think twice before leaving Britain The application of VAT to private school fees for the first time this year has also diminished the UK's appeal to the very rich. Juerg Steffen, the chief executive of Henley & Partners, describes Britain as 'a cautionary tale in this new era of wealth migration', noting that the UK's wealth outflow had been years in the making but accelerated by pivotal policy shifts. 'Before 2016 the UK had always attracted more millionaires than it lost to migration.' Where are the wealthy moving? The primary destination is the United Arab Emirates (UAE), with Dubai and Abu Dhabi expected to gain a net 9,800 high-net-worth individuals from around the world this year. Steffen attributes the UAE's appeal to 'zero income tax, world-class infrastructure, political stability and a regulatory framework that treats capital as partner rather than prey'. The United States also remains a top magnet, projected to see a net inflow of 7,500 dollar millionaires. • Farage the Robin Hood of tax? The calculator says no Switzerland is set to attract a net gain of 3,000 migrating dollar millionaires this year; Italy 3,600; Portugal 1,400; and Greece 1,200, Henley & Partners said. Monaco, estimated to gain about 200 millionaires, remains particularly popular among those from the UK, Africa and the Middle East. These countries have favourable tax regimes and lifestyle appeal and some have 'investment migration programmes', which can grant citizenship in exchange for financial contributions. Where are the lowest taxes? Many countries have no personal income tax, CGT or IHT. These are often small nations or city-states with robust economies driven by sectors such as tourism, finance or natural resources. Monaco and the UAE have no income tax or CGT and Monaco has no property tax. Other countries with standard tax systems offer attractive incentives for the wealthy. These often involve flat taxes on foreign income or specific exemptions. For example, Switzerland offers 'lump-sum taxation' where qualifying foreign residents who are not employed in the country pay a tax based on living expenses rather than actual income and wealth.
The Independent
4 days ago
- Business
- The Independent
I'm leaving the UK because of how Labour has treated wealthy non-doms like me… ciao!
Belatedly – almost a full year after Labour came to power, in fact – the government has finally realised the damage it is doing. In her first Budget as chancellor, Rachel Reeves scrapped the non-dom tax status, which for centuries has allowed some of the UK's biggest wealth-creating residents to limit the amount of tax they paid on their overseas earnings. Days before this beleaguered administration's first anniversary in power, Reeves is said to be considering one of those U-turns that have become fashionable in Labour circles. Should it happen – and, as a non-domiciled resident myself, I really think it should – the chancellor's change of heart will come after a spate of high-profile (and very high-value) people have left the UK for more favourable tax jurisdictions. Following the abolition of the non-dom tax status in April, one of Britain's richest men, Lakshmi Mittal, the billionaire steel magnate behind the world's largest steel company, announced his intention to leave for tax-friendlier shores. He wasn't alone. Whatever Reeves comes up with to stem the non-dom exodus – and she's rumoured to be reviewing changes that made the worldwide assets of all UK residents subject to inheritance tax at 40 per cent – there's a feeling among the one-percenters that it will be too little, too late. More than 10,000 millionaires are reported to have left the UK in the past year, with one in 10 non-doms relocating since Labour came to power. According to the latest Henley Private Wealth Migration Report, published this week, Britain is set to haemorrhage 16,500 millionaires this year – a new record, Government changes to the non-dom regime could end up costing the Treasury more than £12 billion in its first year alone. Having made my millions by launching a fintech firm in north America, I myself am off to start afresh – in Italy, which has a lump-sum tax regime of €200,000, designed to attract investment from foreign high net-worth individuals. Just as Reeves was wondering how Britain might compete, Nigel Farage announces how a Reform government would woo back billionaire investors and entrepreneurs: by charging wealthy non-doms a £250,000 fee for access to a bespoke tax system that grants them the tax exemptions they once enjoyed for free. Would Farage's 'Britannia Card' idea – which would allow high-net worth individuals like me to to avoid inheritance tax – be enough to stop me from moving my business to Italy? Probably not, actually. I'm Canadian by birth and a mum of six, and have lived in the UK since 2022. With a doctorate from Henley Business School, an MSc and an MBA in finance focused on consumer credit, I launched my fintech business in 1995 that turned over more than $2 billion. I have also spent millions restoring Lympne Castle, a fortified Grade I-listed manor house in Kent used by successive Archbishops of Canterbury in the middle ages, to its former glory. And, thanks to Rachel Reeves, I am ready to walk away from it all. Britain's non-domicile tax status was established in 1799, when George III was on the throne, and successfully transformed the UK into a financial powerhouse. It meant that a non-domiciled individuals – some of the country's biggest wealth creators, but whose permanent residences are outside the UK – paid tax only on the money they earned in the UK. It was a beautiful symbiotic relationship, like a well-manicured garden and the bees that pollinate it. For centuries, non-doms have poured their hard-earned cash into the economy, set up businesses and created employment opportunities. Until this April, when Labour abolished the non-dom status, funnelling our richest investors and entrepreneurs towards the departure lounge. In her quest to better tax the wealthy, Reeves effectively handed a red card to 74,000 affluent individuals and families, many of whom are in the top 3 per cent of taxpayers. This is not just a blunder; it's akin to setting fire to a cash register and wondering why the store is suddenly empty. Those non-doms collectively contribute about £8.9 billion in income tax, capital gains tax and national insurance. By pushing them out of the UK, Reeves has not only hurt the economy but has also exacerbated poverty for the one in five people living in the UK who are already struggling to make ends meet. Countries like Dubai, Monaco and Switzerland are already rolling out the red carpet, saying: 'Come invest your billions here – we'll even throw in a free latte!' Meanwhile, in the UK, the government is shouting: 'Stay! But also pay taxes on your foreign assets, your inheritance, and maybe even your pet goldfish and, oh, you can only stay four years…' It's no wonder the non-doms are choosing to leave. They're not just leaving their homes; they're taking their investments and future revenue with them, and the UK economy is left standing there like a forlorn child in the playground. Now, let's consider a different approach. Instead of dismantling a system that has historically been beneficial, why not implement a fee for non-doms to remain in the UK? Imagine charging £250,000 a year, as Farage has suggested, which could help fill the financial black hole created by the government's ill-fated fiscal decisions. This would not only maintain the £8.9 billion in tax revenue, but could also provide an additional £13 billion from fees. While the idea of exempting non-doms from inheritance tax might seem appealing, it doesn't address the broader issues of worldwide asset taxation. That said, given Farage did not address the four-year cap or the taxation on foreign assets (does he assume everyone wants to be double taxed?). The proposal feels to me like a half-hearted attempt to appease the masses while ignoring the real problem. If we want to make a meaningful change, we need to rethink our approach entirely. The non-dom exodus serves as a cautionary tale about the consequences of political decisions that ignore economic realities. Rather than offering a Britannia Card, how about simply taxing the wealthy – and not at the expense of the very system that has historically benefited the UK economy? Dr Ann Kaplan Mulholland is CEO of iFinance Canada. The writer's fee for this article has been donated to Z2K, a charity working to end poverty in the UK
The Independent
5 days ago
- Business
- The Independent
Farage says non-dom policy ‘very attractive' despite tax expert cost warning
Nigel Farage has insisted Reform UK's proposed change to non-dom tax rules was 'very attractive' despite an expert warning the policy could cost the UK £34 billion. The party leader said he was 'not clever enough' to answer questions about the suggested hit to Britain's economy but dismissed criticism as 'off-the-wall nonsense' as he held a press conference on Monday. Mr Farage also batted away suggestions that his plan for a so-called Britannia Card was a 'profoundly left-wing concept' as he was asked whether the announcement was a bid to win votes from low-income workers. Reform has said it would reinstate non-dom status for wealthy individuals in exchange for a £250,000 one-off fee which would be given to Britain's poorest workers. Under the 'Britannia Card', non-doms would be offered a 10-year renewable residence permit and a return to the controversial arrangement whereby overseas income can be shielded from UK tax. They would also avoid inheritance tax, with the one-off payment then being distributed to Britain's bottom 10% of earners. Announcing the policy in central London on Monday, Mr Farage said: 'Many talented people are leaving, and we want as a party as many entrepreneurs, as many risk-takers, as many job creators, as many people paying lots of tax, as many people investing huge sums of money – we want as many of them as possible to be in our country.' Reform chairman Zia Yusuf added: 'The reality is that even the term non-dom has become, you know, these people have been made to feel persona non grata… there's a narrative that has been created that these people contribute nothing. 'So we have to set right that, too.' It comes as Dan Neidle, founder of Tax Policy Associates, claimed the policy would cost the UK £34 billion, warning that some highly skilled and highly paid professionals would not be able to afford the £250,000. The Office for Budget Responsibility has assessed that recent Labour and Conservative reforms to the non-dom status raise a net £33.9 billion from 2026/27 to 2029/30. This sum is generated from a small number of very wealthy people who Mr Neidle said would opt to buy a Britannia Card and pay no tax, meaning the revenue would be lost. Because the £250,000 one-off payment would be redistributed, none of the money raised would reduce the impact on the public finances, he said. The Labour Government abolished the non-dom tax status in April, which is where UK residents whose permanent home or domicile for tax purposes is outside Britain. Mr Farage was asked about the analysis on Monday and was also pressed on whether he had an overall costing for the policy. 'Oh dear, oh dear, oh dear. I'm not clever enough to answer any of that,' he said. 'That just sounds completely off-the-wall nonsense. I'm really sorry, but I think what we've got here is a very attractive offer. ' People are fleeing this country in droves. Our economy is in trouble. There are fears of wealth taxes coming in. All the mood music is bad.' The party leader said he believed 'tens of thousands of people' would come to the UK 'on this ticket' if Reform is successful. 'Even if after lots have come, we're going to get a trickle, not a flood, provided they're still paying their average £120,000-a-year income tax, provided they're still investing the billions that they do in business, in job creation, in risk – I tell you what, we'll be in a much better place than we are right now,' he said. Asked if he was attempting to give low-income workers free money to win over their votes, the Reform UK leader told reporters: 'Nice try, but the idea that I'm somehow putting forward a profoundly left-wing concept today could not be further from the truth. 'We're saying we want people who make loads of money to come in to Britain in huge numbers and pay lots and lots of tax and buy lots of houses and spend lots of money.' Rachel Reeves said Reform's announcement amounted to 'a tax cut for foreign billionaires'. Speaking during a visit to the West Midlands, the Chancellor said: 'That would mean either taxes on ordinary working people would have to go up to compensate for those lack of revenues, or Reform would have to cut public services, including the NHS. 'So, this is a tax cut by Nigel Farage and the Reform Party for foreign-born billionaires. Labour's priority is easing the pressure on ordinary working families and investing in our public services, including the NHS.'
Yahoo
5 days ago
- Business
- Yahoo
Farage says non-dom policy ‘very attractive' despite tax expert cost warning
Nigel Farage has insisted Reform UK's proposed change to non-dom tax rules was 'very attractive' despite an expert warning the policy could cost the UK £34 billion. The party leader said he was 'not clever enough' to answer questions about the suggested hit to Britain's economy but dismissed criticism as 'off-the-wall nonsense' as he held a press conference on Monday. Mr Farage also batted away suggestions that his plan for a so-called Britannia Card was a 'profoundly left-wing concept' as he was asked whether the announcement was a bid to win votes from low-income workers. Reform has said it would reinstate non-dom status for wealthy individuals in exchange for a £250,000 one-off fee which would be given to Britain's poorest workers. Under the 'Britannia Card', non-doms would be offered a 10-year renewable residence permit and a return to the controversial arrangement whereby overseas income can be shielded from UK tax. They would also avoid inheritance tax, with the one-off payment then being distributed to Britain's bottom 10% of earners. Announcing the policy in central London on Monday, Mr Farage said: 'Many talented people are leaving, and we want as a party as many entrepreneurs, as many risk-takers, as many job creators, as many people paying lots of tax, as many people investing huge sums of money – we want as many of them as possible to be in our country.' Reform chairman Zia Yusuf added: 'The reality is that even the term non-dom has become, you know, these people have been made to feel persona non grata… there's a narrative that has been created that these people contribute nothing. 'So we have to set right that, too.' It comes as Dan Neidle, founder of Tax Policy Associates, claimed the policy would cost the UK £34 billion, warning that some highly skilled and highly paid professionals would not be able to afford the £250,000. The Office for Budget Responsibility has assessed that recent Labour and Conservative reforms to the non-dom status raise a net £33.9 billion from 2026/27 to 2029/30. Reform UK's Britannia card will bring thousands of wealthy job creators back to the UK and directly benefit working people. ✅ — Nigel Farage MP (@Nigel_Farage) June 23, 2025 This sum is generated from a small number of very wealthy people who Mr Neidle said would opt to buy a Britannia Card and pay no tax, meaning the revenue would be lost. Because the £250,000 one-off payment would be redistributed, none of the money raised would reduce the impact on the public finances, he said. The Labour Government abolished the non-dom tax status in April, which is where UK residents whose permanent home or domicile for tax purposes is outside Britain. Mr Farage was asked about the analysis on Monday and was also pressed on whether he had an overall costing for the policy. 'Oh dear, oh dear, oh dear. I'm not clever enough to answer any of that,' he said. 'That just sounds completely off-the-wall nonsense. I'm really sorry, but I think what we've got here is a very attractive offer. 'People are fleeing this country in droves. Our economy is in trouble. There are fears of wealth taxes coming in. All the mood music is bad.' Watch me speak LIVE as Reform UK announces the Britannia Card. 🇬🇧 — Nigel Farage MP (@Nigel_Farage) June 23, 2025 The party leader said he believed 'tens of thousands of people' would come to the UK 'on this ticket' if Reform is successful. 'Even if after lots have come, we're going to get a trickle, not a flood, provided they're still paying their average £120,000-a-year income tax, provided they're still investing the billions that they do in business, in job creation, in risk – I tell you what, we'll be in a much better place than we are right now,' he said. Asked if he was attempting to give low-income workers free money to win over their votes, the Reform UK leader told reporters: 'Nice try, but the idea that I'm somehow putting forward a profoundly left-wing concept today could not be further from the truth. 'We're saying we want people who make loads of money to come in to Britain in huge numbers and pay lots and lots of tax and buy lots of houses and spend lots of money.' Rachel Reeves said Reform's announcement amounted to 'a tax cut for foreign billionaires'. Speaking during a visit to the West Midlands, the Chancellor said: 'That would mean either taxes on ordinary working people would have to go up to compensate for those lack of revenues, or Reform would have to cut public services, including the NHS. 'So, this is a tax cut by Nigel Farage and the Reform Party for foreign-born billionaires. Labour's priority is easing the pressure on ordinary working families and investing in our public services, including the NHS.'
