A luxury Porsche 911 Carrera GTS car parked outside a Chanel store on Bond Street in London, UK on October 16, 2023.
Mike Kemp | In Photography | Getty Images
LONDON — Britain’s super-wealthy non-Doms are calling on the government to introduce an Italian-style flat tax system to stem the flow of wealth as their privileged status is threatened in the next Budget.
Foreign Investors for Britain, a lobby group made up of non-nationals and their advisers, in collaboration with think tank Oxford Economics, will impose a single annual fee on wealthy foreigners in exchange for exemption from inheritance tax (IHT). He proposed a graduated tax system (TTR). For up to 15 years, UK tax on UK overseas income and profits on non-UK assets will apply.
These fees would be levied according to a person’s net worth, with the proposed amount being £200,000 ($260,447) per year for values up to £100m and values above £500m. That would be £2 million a year. This differs from Italy’s system, which imposes a recently doubled tax rate of 200,000 euros a year, regardless of wealth.
Foreign investors in the UK are due to meet with government officials on Thursday to discuss the proposal.
“If there is no stability, people are now making plans to leave,” Foreign Investors chief executive Leslie McLeod-Miller told CNBC at an event announcing the proposal on Wednesday. Ta.
People with the widest shoulders often have the longest legs.
leslie mcleod miller
Chief Executive of the British Foreign Investors Association
Britain’s non-dom status is a colonial-era tax system that exempts people living in the UK but domiciled elsewhere from paying tax on income and capital gains earned from abroad for up to 15 years. . An estimated 74,000 people will enjoy this status in 2023, up from 68,900 the previous year.
The government has long been at loggerheads politically, but in August Labor announced plans to strengthen plans to abolish non-dom status by also banning the use of trusts to protect overseas assets from IHT. It has been under pressure in recent months since its launch. .
It comes as Chancellor of the Exchequer Rachel Reeves is expected to announce a bumper tax increase in her budget on October 30, to help close a reported £40bn funding gap in the public finances. This figure was previously put at £22bn. The Treasury Department did not immediately respond to CNBC’s request for comment about the shortfall or future discussions with FIFB.
Non-Dom moves funds
Reeves has previously said scrapping the scheme could free up 2.6 billion pounds ($3.38 billion) for the Treasury over the course of the next government.
But research from Oxford Economics last month warned that the plans could cost taxpayers £1bn in direct revenue alone by 2029/30. The 72 non-Kingdom countries surveyed are estimated to have invested a total of nearly £8.5 billion into the economy since arriving in the UK.
“This is just a fraction of the money invested by non-dam companies, and this investment is at risk,” Alex Stewart, an associate director at Oxford Economics, said on Wednesday.
In fact, some have already begun taking preemptive moves.
New research published on Wednesday by an economic think tank suggests that non-Dom countries that took part in the study have already sold at least £842.2m in anticipation of the changes.
Several non-Kingdom participants at the event, who requested anonymity, said they were considering moving to jurisdictions such as Italy, Switzerland and Dubai if a more aggressive plan was adopted.
Wednesday’s survey of 115 non-Kingdom residents and 42 advisors found that around one in 10 (13%) said they would go ahead with their exit plan even if the TTR was introduced, compared to 98%. They responded that they would withdraw if a flat plan was proposed. -No tax system was introduced.
We need to understand that in order to create the jobs, wealth and prosperity we want, people need to invest here.
Sadiq Khan
mayor of london
“People with the broadest shoulders often have the longest legs, so it’s important to understand that,” says MacLeod-Miller.
Dominic Lawrence, partner at Charles Russell Speechlies, said the scheme was an “improvement” on Italy’s system in that it was scalable to suit the wealthy, thereby generating additional tax revenue. . Mr Laurence, who helped develop the proposals, added that the proposals should be introduced alongside existing measures to abolish non-resident status to “avoid any perception of a U-turn”.
Oxford Economics said it is currently working to estimate how much revenue could be gained from the TTR proposal.
Labor Court Wealth Creator
The Labor government has expressed its determination to tackle tax inequities and promised to close tax loopholes in its election manifesto. However, he appears to have softened his stance since then, with Reeves reportedly reconsidering some elements of the anti-Dom crackdown.
Prime Minister Keir Starmer on Monday brought together 300 business leaders for Labour’s first international investment summit, seeking to promote Britain as a center for growth and wealth creation.
London Mayor Sadiq Khan told CNBC at an event on Monday that the government must walk a fine line in ensuring wealth creators are “adhered to the rules” while ensuring they are not alienated. spoke.
Terrace house at Westbourne Gardens in the upscale area of Bayswater near Royal Oak in London, England on January 13, 2023.
Mike Kemp | In Photography | Getty Images
Mr Khan said: ‘We need to understand that London and our country need wealth creators. To create the jobs, wealth and prosperity we want, we need people to invest here. We need to understand that.”
“The key mission of this government is growth and we cannot achieve that growth without the investment of the people you are talking about. I hope the Prime Minister’s remarks reassure the people,” he added. .
Mayor of the City of London Michael Mainelli acknowledged on Monday that there were “problems” with the non-Dom rules, but said Britain should continue to have a “competitive tax system”.
