Petrified non-doms ready to flee Britain over Labour's tax plans, experts say | taxes and spending

Nimesh Shah, CEO of Blick Rothenberg, an accounting firm that specializes in advising non-wealthy people on tax matters, said people are flying out right now. I'm not being dramatic, I'm leaving right now.

Shah said some of his clients were horrified by plans by some of Britain's wealthiest people to abolish the non-residency system, which has allowed wealthy people to live in Britain for the past 225 years and avoid paying tax on their overseas income.

Labor has long promised to end the Vidom regime, introduced under George III in 1799, which allowed nationals who lived for periods in distant colonies to avoid paying taxes in Britain and pay billions of dollars in additional tax hikes. Free on-campus breakfast clubs and more hospital and dental appointments.

Rishi Sunak (left) and Jeremy Hunt. Labor has pledged to close the Conservatives' tax loopholes. Photo: WPA/Getty Images

But Prime Minister Jeremy Hunt surprised the wealthy and Labor by stealing the policy and announcing in his spring budget that the regime would be abolished from April 2025. Instead of using the expected $2.7 billion in additional taxes to fund breakfast clubs and hospital reservations. , Hunt promised to cut national insurance.

Labor has announced strengthened plans, including one that would allow people who lose their tax-exempt status to continue to avoid paying inheritance tax on overseas assets held in offshore trusts, and announced it would close loopholes in the Hunt plan.

Shah said: We and our clients had expected Labor to scrap this if they won the election. But no one expected the Conservatives to rush there first and scrap it.

He said many of his non-national clients, with fortunes worth hundreds of millions of pounds, were shocked at the speed with which Hunt changed the rules of the game and destroyed their lives when they came to make their lives in the UK. [under the non-dom rules]. But he said Labour's plans were scaring the super-rich and they were actively exploring where to move.

Shah and several other advisers contacted by the Guardian said many of their non-national clients were looking to move to Italy. Italy has introduced a system where the rich can pay a flat tax of just 100,000, no matter how much money they make.

Limassol, Cyprus. The country has a tax system designed to attract the super rich. Photo: f8grapher/Alamy

France, Greece, Cyprus, Malta, Portugal and Spain have similar plans designed to attract wealthy, internationally mobile elites. Spain's expat tax regime has been nicknamed the Beckham Law after David Beckham, who became one of the first to use the law during his time at Real Madrid.

Other UK-based non-domes are reportedly considering moving to traditional tax havens such as Monaco, Switzerland, Dubai and Caribbean islands. But a recent academic study found that the super-rich may not follow through on their threats to move for fear of being bored to death in culturally barren areas.

Under non-dom rules, people registered with HMRC as non-residents are required to pay UK tax on income and capital gains earned abroad, including cash from company shares or the sale of a second home, unless they bring or deposit the money into the UK. there is none. To a UK bank account. You can remain eligible for up to 15 years, but after 7 years you will be charged a minimum annual fee of 30,000.

There were 68,800 nondomes in the UK in 2021-22, according to the latest HMRC data.

Hunts changes will only allow new arrivals to avoid tax on their overseas income for the first four years of their residence in the UK. After that, you are fully taxed on your worldwide income and gains.

Shah said some people have recently moved to the UK to build a life and business here and have their children attend school here. However, from April next year, it will become subject to taxation globally. It's a cliff edge. It's no wonder they want to leave.

Miles Dean, partner and head of international tax at tax advisory firm Andersen, said his advice to clients was simple: If you can leave within six months, make plans to leave now. The UK is no longer a safe tax environment.

David Beckham signed a contract with Real Madrid at the Santiago Bernabú Stadium in July 2003. The footballer inspired the Spanish Beckham Act. Photo: AFP/Getty

But some of his customers aren't ready to wait that long. I spoke with two customers yesterday. One older man is moving to Dubai, while another 40-year-old entrepreneur said he sold his business a few years ago and plans to move to Spain next month under the Beckham legal regime.

If you look around the world, there are so many places designed with simple plans for the glamorous and wealthy. These people are highly mobile, and many of them already have a second home somewhere. Why would you stay in the UK?

A study by the London School of Economics found that abolishing the non-dom system would result in just 0.3%, or 77 people, leaving the UK. Dean described this estimate as ridiculous. The opinions of me and the other advisors you spoke with are not made up. These people are really going to leave. they are angry

Andrew Goldstone, a partner at Mishcon de Reya who specializes in advising on offshore tax and trusts, said his clients thought the Conservative and Labor plans were entirely politically motivated and economically foolish. Take Britain's spending, investment, jobs and business with it.

Sophie Dworetzsky, a partner at Charles Russell Speechlys who advises the richest, said her clients felt like they were trying to squeeze every last drop out of Labour's proposals until there was nothing left. She added: We need to worry about displacing internationally mobile individuals, the investments they can bring to the country, and the revenue generated through wealth creation.

The controversy over the non-dom tax loophole went from a niche issue among tax experts to wider public disclosure in 2022 after it was revealed that Rishi Sunak's wife was using the position to avoid paying millions of pounds in tax on dividends she received from the billionaire. It turned into a discussion. Father's IT business.

After widespread outrage, Akshata Murty said she would pay UK tax on all future income as her tax regime was incompatible with her husband's. [then] She added that she appreciated Britain's fairness.

Rishi Sunak and Akshata Murthy. The businessman gave in to pressure to pay taxes to Britain. Photo: Hannah McKay/Reuters

Other famous bidoms include steel magnate and billionaire Lakshmi Mittal. Daily Mail owner Lord Rothermere; Oligarch and former owner of Chelsea football club Roman Abramovich; Lord Ashcroft, a multi-millionaire, was a former vice-chairman of the Conservative Party. and Sir James Goldsmith and his children, including Zac Goldsmith, Conservative minister and long-time friend of Boris Johnson.

A Treasury spokesperson said: Our new, simpler system will ensure we remain internationally competitive to attract top talent to the UK, while bringing in an extra $2.7 billion a year for public services by 2028-29. New arrivals will benefit from a 100% relief on foreign income and gains for their first four years as UK tax residents, while transitional arrangements will be put in place for current non-domestic residents.

A Labor spokesman said he did not believe the policy would lead to an exodus of non-class people. We do not accept this argument, they said. Before the Conservatives stole Labour's non-dom policy, they were making the exact same argument to conveniently tone down the alarm bells when adopting the policy.

Labour's proposals are to make the tax system fairer. If you build a house or do business in the UK, you will also have to pay taxes in the UK.

Sources 1/ https://Google.com/ 2/ https://www.theguardian.com/politics/2024/apr/13/uk-non-doms-uk-labour-tax-plans The mention sources can contact us to remove/changing this article

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