A growing number of wealthy expats say they are leaving the UK in response to the abolition of the “non-dom” regime that allowed them to avoid paying tax on overseas income.
According to more than a dozen interviews with wealthy expats and their advisers, this change – supported by both the Conservatives and Labor Parties – has contributed to a decline in the UK’s relative attractiveness . Other deterrents cited include Brexit, financial and political instability and security concerns.
“Brexit happened and the Conservatives promised to make the UK like Singapore but instead they turned it into Belarus,” says a billionaire businessman who has lived in London for 15 years and is now switching his tax residence. I went to Abu Dhabi and said. “Security is a big issue now and is another factor that contributes to the tax reasons why people want to leave.”
In March, prime minister Jeremy Hunt stole one of the opposition Labor party’s flagship fiscal policies when he announced annulment of anarchy.
Labor shadow chancellor Rachel Reeves followed with proposals to intensify the planned crackdown, notably reversing the Conservative Party’s decision to allow non-owners who will lose benefits from next April to permanently protect foreign assets held in an offshore trust away from inheritance tax.
Polls have taken Sir Keir StarmerThe Labor Party is on course to win the general election on July 4.
“The UK’s 40% inheritance tax on your global assets is a real problem,” says one European businessman in his 50s, who is moving his family from London to Switzerland after more than a decade. century in England, said. “It was the overall instability that was the nail in the coffin for me. If there had been a more balanced, less punitive inheritance tax, I might have considered staying.”
While Starmer seeks to position Labor as “the party of wealth creation”, the changes to nondom mark one of several potential tax increases under a Labor government.
While working has committed not to increase income tax, national insurance, corporation tax or VAT, the party insists it has “no plans” to increase capital gains tax or inheritance tax or levy any form of wealth tax, but refuses to rule them out . “We are not looking for a mandate to raise taxes for people,” Rachel Reeves, the shadow chancellor, told the Financial Times this week.
A party official said “no one has seen” an alleged Labor Party memo, reported by the Guardian, which stated that the party was considering plans to increase CGT rates in line with income tax and business limits as well as agricultural land inheritance tax reduction. Labor officials said the report appeared to be based on research by the Institute for Fiscal Studies and the Tax Policy Association.
Trevor Abrahmsohn, director of Glentree Properties, a London estate agent, said there had been a steady decline in inquiries for properties worth £10m, which he attributed to “higher interest rates and expected changes to the non-regulatory regime.” “As more high-end properties come on the market, I predict there will be fewer buyers and prices will fall,” he added.
Indian vaccine billionaire Adar Poonawalla last month told the FT that the nondom change had hurt the UK. “Some people are willing to pay that cost like me, but most others are not,” said Poonawalla, who heads the Serum Institute of India. “They can easily move out.”
According to the most recent estimates from HM Revenue & Customs, the UK’s tax authority, there are 68,800 individuals declaring void status on their tax returns in 2022, but there is a lag in the data. data makes it impossible to evaluate recent moves.
Fiona Fernie, a partner at tax and accounting firm Blick Rothenberg, said: “There is no hard and fast data on unintentional departures but there is a real buzz around these at the moment.” people are considering leaving and actually going.” “Both sides have given a clear indication that non-dominant nations are targeted and that any perceived benefits to them will be significantly reduced. This was the catalyst for the departure.”
One French investor in his 40s said that “any expatriate in the UK who has the option to leave does so because anarchy is over”. He will move from London to Milan early next year, lured by a system announced by Italy in 2017 that exempts foreign income from Italian tax in exchange for a payment of 100,000 euros per year. He added that a return to France was “unlikely”. current political situation.
A crackdown on the regime began eight years ago under then Conservative chancellor George Osborne. He tightened the regime so that from April 2017, foreign residents who have lived in the UK for more than 15 of the past 20 years are considered UK resident.
Since then, other jurisdictions in Europe – including France, Italy and Portugal – have gone in the opposite direction, launching equivalent statelessness or immigration regimes to attract families. wealth, increasing competition with traditional paradises such as Monaco and Switzerland.
Italy, Switzerland, Malta and the Middle East are now the most popular destinations for people leaving the UK, according to advisers.
Although non-corporations do not pay tax on their overseas income, they are still taxed on their UK income. Proponents of the regime argue that non-doms bring skills, jobs and investment to Britain.
The American School in London is concerned about future enrollment due to the abolition of non-dom, according to two people familiar with the situation. The American School declined to comment.
A French businessman in his 50s residing in Switzerland said he had begun the process of moving part of his business to the UK but backed off after the government announced it would abolish the regime. government.
“The Conservatives have sent a very strong signal that they don’t want foreigners here anymore and Labor will do nothing to change that. I’m 100% sure I won’t be back.”
He added: “Is nondomism a fair system? No, that’s not true. Is it effective? Correct.”
Fears of a tougher tax regime are also causing some British citizens to consider leaving the country. Henley & Partners, the residency and citizenship consultancy, said it had received a threefold increase in inquiries from UK nationals between 2022 and 2023 and a 25% increase over the same period last year in the first half of this year.
Dominic Volek, head of the private client group at Henley & Partners.
