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Wealthy expats strengthen plans to leave UK amid tax hikes

Wealthy expats strengthen plans to leave UK amid tax hikes
Wealthy expats strengthen plans to leave UK amid tax hikes

 


A growing number of wealthy foreigners say they are leaving the UK in response to the abolition of the non-domestic system, which allows them to avoid paying tax on overseas income.

Changes supported by both the Conservatives and Labor have contributed to a relative decline in Britain's attractiveness, according to more than a dozen interviews with wealthy expats and their advisers. Other deterrents cited include Brexit, financial and political instability, and security concerns.

Brexit happened and the Conservatives promised to make Britain like Singapore, but instead turned it into Belarus, said the billionaire businessman who lived in London for 15 years and is now moving his tax residence to Abu Dhabi. Security is now a major issue and another contributing factor to the tax reasons people want to leave.

Last March, Prime Minister Jeremy Hunt stole one of the opposition Labor Party's key fiscal policies when he announced the abolition of Vidom's government.

Labor shadow chancellor Rachel Reeves has floated proposals to strengthen the planned crackdown, notably overturning the Conservatives' decision to allow foreign assets held in offshore trusts to be permanently shielded from inheritance tax by non-government entities that will lose benefits from April next year. .

Sir Keir Starmer's Labor party is likely to win the July 4 general election, according to opinion polls.

A European non-national businessman in his 50s who is looking to move from London to Switzerland with his family after living in the UK for more than a decade said Britain's 40% inheritance tax on global assets was a real problem. The nail in the coffin for me is the overall instability. If there had been a more balanced and less punitive estate tax, I would have considered keeping it in place.

Starmer has sought to position Labor as the party of wealth creation, but the non-dom changes represent one of several potential tax rises under a Labor government.

Labor has pledged not to increase income tax, national insurance, corporation tax or value-added tax (VAT), but the party refused to rule out raising capital gains or inheritance tax or imposing any form of wealth tax, although it insisted it had no plans to do so. Shadow Prime Minister Rachel Reeves told the Financial Times this week: We are not asking for an order to raise our taxes.

A party official said no one had seen the Labor memo supposedly reported by the Guardian. The memo explains that the party is considering plans to increase the CGT tax rate in line with the income tax, cap project, and agricultural land inheritance tax cuts. Labor officials said the report appears to be based on research by the Institute for Fiscal Studies and the Tax Policy Association.

Trevor Abramsohn, director of London estate agency Glentree Properties, said inquiries for the 10 million property had been steadily falling due to higher interest rates and expected changes to the non-dom regime. He added: As more luxury properties come to the market, we expect there will be fewer buyers and prices will fall.

Indian vaccines billionaire Adar Poonawalla told the FT last month that the non-dom changes had harmed the UK. Poonawalla, director of the Serum Institute of India, said some people, like me, are willing to pay the cost, but most people are not. They can be easily moved.

The latest estimates from HM Revenue & Customs, the UK tax agency, show that 68,800 individuals claimed non-dom status on their 2022 tax returns, but data delays make it impossible to measure recent movements.

There is no hard and fast data on non-national departures, but it is currently a hot topic among those considering leaving the country and those who actually will, said Fiona Fernie, partner at tax and accounting firm Blick Rothenberg. There is a clear indication from both parties that non-domes are the target and any benefits perceived to be provided to them will be significantly reduced. This is the catalyst for departure.

One French investor in his 40s said the end of the Vidom regime was the reason why any foreigner who had the option to leave the UK could do so. He is moving from London to Milan early next year, lured by Italy's system announced in 2017 that exempts foreign income from Italian tax in return for paying $100,000 a year. He added that considering the current political situation, returning to France is impossible.

The crackdown on Vidom began eight years ago under then-Conservative Prime Minister George Osborne. He strengthened the system so that, from April 2017, foreign residents who have lived in the UK for more than 15 of the last 20 years will be considered resident in the UK.

Since then, other European jurisdictions, including France, Italy and Portugal, have gone in the opposite direction. It launched similar non-domestic, or repatriation, schemes to attract wealthy families and increased competition from traditional havens such as Monaco and Switzerland.

Italy, Switzerland, Malta and the Middle East are currently the most popular destinations for people leaving the UK, according to advisers.

Non-doms don't pay tax on their overseas income, but they are taxed on their UK income. Regime supporters argue that Vidom brings technology, jobs and investment to Britain.

American schools in London are concerned about future enrollment because of the non-dom abolition, according to two people familiar with the situation. American Schools declined to comment.

A French businessman in his 50s living in Switzerland said he had started the process of moving part of his business to the UK but withdrew after the government announced it would scrap the non-dom system.

The Conservatives have sent a very strong signal that they no longer want foreigners coming here and Labor will do nothing to change that. I'm 100% sure I won't be coming back.

He added: Was the non-dom regime a fair system? No, it wasn't. Was it efficient? It was a bell.

Fears of a stricter tax system are forcing some British nationals to leave the country. Henley & Partners, which provides residency and citizenship advice, said inquiries from UK nationals had tripled from 2022 to 2023, with a 25% increase in the first half of this year compared to the same period last year.

Dominic Volek, head of Henley & Partners' private client group, said his London office was currently fielding a number of inquiries about the Labor party's move to join and what would happen next.

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