Tuesday, March 5, 2024 12:28 p.m.
If we start taxing income and assets outside the UK, we might as well pack up for people outside the UK.Steve Rigby says there’s a better way
Do the leaks suggest that Jeremy Hunt is prepared to scrap tax rules for non-kingdoms to be taken seriously? Or was this one of those now-traditional pre-budget kite-flying exercises to see how controversial policies would be received?
In a way, it doesn’t matter. Whether or not it is announced in the Budget, reform of a system originally designed in colonial times is likely to be underway.
Labor plans to abolish the government completely, making it the rare issue on which non-partisan parties can get bipartisan agreement, at least on the surface. It’s debatable whether the Conservatives’ newfound admiration for Labour’s ideas is due to economic necessity or political expediency, but again, it doesn’t really matter. isn’t it. Non-doms are in the line of fire.
Not before time. There hasn’t been a proper review of non-DOM rules since 2008, but now is the time to be smart and make considered reforms.
But current or future prime ministers must take note. If you don’t want to risk losing top talent and important sources of tax revenue, you can’t take a hard line against change. A considered and progressive approach to non-Doms, based on the principle of mutual benefit, should be the goal.
This is especially true in London. Because any change to a non-Dom regime would have a disproportionate impact on the capital. The population is approximately 55,200, with non-Dom nationals accounting for approximately 0.08% of the population. This small London-based group has been attracting a lot of attention, especially with their restaurants in Mayfair and Chelsea.
The non-Kingdom holds an estimated £10.9bn of income and profits overseas. If the tax breaks are repealed, this amount will be fair to the Treasury. While the non-domestic raids may seem like a silver bullet to revive the UK economy, with Labor planning to use the windfall to fund a number of public spending programmes, we will not see a mass exodus. Care must be taken not to cause this. If we set out to tax non-UK income and assets, we may end up packing for people outside the UK. Parts of London will become ghost towns for the wealthy. This £10.9 billion figure would be significantly reduced, making reform a pointless endeavor.
However, there is a middle ground, and Europe offers a non-DOM “cheat sheet”. Italy is not well known for being tax-efficient, but in 2020 the Italian government introduced an investor visa, allowing foreigners to pay a lump sum of 100,000 euros per year in taxes, as well as a 15-year extension to their families. They can now pay an additional 25,000 euros per person. Year. Although still in its infancy, more than 2,000 people have participated in the scheme in his first two years of open public participation.
Portugal is another good example. The now-defunct Golden Visa scheme attracted 12,400 non-nationals and a further 20,400 family members, returning €7.3 billion to the country’s economy. Meanwhile, to attract wealthy foreigners, Switzerland has long offered a forfeiture system that imposes a means-tested tax on each resident based on the rental value of Swiss real estate.
Non-dome has become politically stigmatized and changes are coming to the regime that are no longer fit for purpose. But for the future of the economy in London and across the UK, the Prime Minister must avoid doing more harm than good.
Steve Rigby is co-CEO of Rigby Group PLC.