Latest news with #nonDomTax
The Independent
2 days ago
- Business
- The Independent
Rachel Reeves cannot afford to lose any more non-doms
Rachel Reeves is to water down plans scrapping her non-dom tax rules amid concerns about the number of wealthy individuals deserting the UK. It must be true, because it's being repeated everywhere – complete with a bland, non-denial from the Treasury: 'The government will continue to work with stakeholders to ensure the new regime is internationally competitive and continues to focus on attracting the best talent and investment in the UK.' A key item under discussion is said to be the proposal to make non-doms' worldwide assets liable to inheritance tax, or IHT, including those held in foreign trusts. There is no doubt many rich people have gone. One analysis by Bloomberg puts the number of company directors who have left at 4,400 in the past year. Examination of Companies House filings shows departures were 75 per cent higher in April than in the same month last year. The worst affected sectors were finance, insurance and property, all of them popular with non-doms. In the most expensive areas of London, stories abound of shuttered mansions, and a knock-on effect across restaurants, hair and beauty salons, car firms and all the other ancillary services. The UK, once a favoured magnet for the world's billionaires and multi-millionaires, has fallen off its perch. A recent Oxford Economics survey found that 60 per cent of tax advisers expect more than 40 per cent of their non-dom clients to leave within two years of Reeves ending their beneficial status. With them will go their families, close staff – and their money. It was the latter that made previous governments, including Labour, seek to attract them in the first place. If they base themselves in Britain, they are more likely to spend and to invest here. That is why other nations are doing their level best to woo them. It's what the Treasury means when it refers to the new regime being 'internationally competitive'. What is bizarre and shaming is that this administration did not see it coming. Seemingly, ministers did not realise that non-doms would quit. They did not appreciate that, in today's world, rich people can move freely and easily and work from anywhere. Either they are guilty of extraordinary unworldliness, deluding themselves that wealthy foreigners would carry on living in the UK merely because they like it here – ignoring the effect on their finances; or they simply did not care, and allowed political ideology to prevail. Whatever the answer, they are now engaged in the sort of reversal and damage limitation exercise which is becoming all too familiar where this government is concerned. The question now is: will it be enough? Already, South Africa's richest self-made woman Magda Wierzycka, the billionaire behind UK venture capital fund Braavos, has stated she will shelve plans to leave should the chancellor U-turn on IHT: 'I would absolutely stay and it's not about protecting my money from the tax man. I pay all my taxes, but South Africa has foreign exchange controls and I don't know whether [my estate] would be able to pay the IHT bill under the current rules.' Whether others are so persuaded, and if Reeves does pull back entirely on IHT, remains to be seen. The problem for her and for Keir Starmer is that the tone has been set. Even if they do climb down, the feeling persists that this iteration of Labour (as opposed to that of Tony Blair, which famously declared it was 'intensely relaxed about people getting filthy rich') cannot abide well-off people. The purging of the non-doms followed a pattern. It joined VAT on private schools, the removal of the winter fuel allowance, hitting farmers with their own new IHT bills, and other measures, aimed at the more advantaged end of society. They can afford it, appeared to be Downing Street 's view. That will be hard to shake-off. The hope must be that the attractions of the UK will weigh heavily and the non-doms will not exit and some, many even, will return. Starmer and Reeves, having set their calamitous course, have much work still to do.
The Independent
2 days ago
- Business
- The Independent
Reeves considers U-turn on non-dom crackdown to halt exodus of wealthy
Rachel Reeves is considering climbing down on her non-dom crackdown to stem the flow of ultra-rich taxpayers leaving the UK. The chancellor is deciding whether to U-turn on the decision to tax non-domiciled individuals inheritance tax based on their global assets. The changes, which formed a key part of Labour's general election campaign, have raised concerns about an exodus of the wealthy as they flee in search of lower taxes. And a senior City figure told the Financial Times 'there will most likely be some tweaks to inheritance tax to stop the non-dom exodus'. Billionaire steel tycoon Lakshmi Mittal is among those said to be considering leaving Britain as a result of the chancellor's changes. A spokesman for the Treasury said: 'The government will continue to work with stakeholders to ensure the new regime is internationally competitive and continues to focus on attracting the best talent and investment to the UK.' The non-dom tax loophole, which lets foreign nationals living in Britain avoid paying tax on overseas earnings, was thrust into the spotlight when The Independent first revealed that Akshata Murty, Rishi Sunak's wife, had used it to save potentially millions of pounds. Ms Murty, whose family business is estimated to be worth around £60bn, later said she would no longer claim the status on her worldwide earnings. At the time, she said she did not want her tax status to be a 'distraction for my husband or to affect my family'. Since Labour came to power in July, the UK has lost a millionaire every 45 minutes, with the exodus driven by Labour's tax grabs and a lack of business confidence. Britain lost a net 10,800 millionaires last year, a 157 per cent increase on 2023, including 78 centi-millionaires (worth at least £100 million) and 12 billionaires. They left for other countries mainly in Europe, such as Italy and Switzerland, as well as the United Arab Emirates. Tax planners have repeatedly warned of an exodus of Britain's super wealthy, with many blaming the impact of Ms Reeves' first Budget in October. And Britain experienced its most significant drop in billionaires ever last year, according to the Sunday Times Rich List. The non-dom regime was replaced by the chancellor with a residency tax under which those living in the UK for more than four years are made to pay income and capital gains tax on overseas earnings. Those who stay long enough also face paying inheritance tax on overseas assets.
Daily Mail
6 days ago
- Business
- Daily Mail
Luxury property prices slump as non-doms flee London
The scrapping of the 'non-dom' tax regime has produced one set of beneficiaries: families wanting to move to London's poshest parts. Areas such as Belgravia and Knightsbridge, with their white stucco terraces, are suddenly within reach of well-off families previously exiled as prices are slashed by up to 40 per cent. Becky Fatemi of estate agent Sotheby's said: 'There has never been a better time to start looking in Kensington, Knightsbridge and Westminster – the areas non-doms have typically left.' By contrast £1 million-plus properties in Chiswick and other more outlying areas need to be trimmed by just 5 per cent to sell. About 10 per cent of non-domiciled residents have fled the UK, driven out by changes to inheritance tax among other shifts in the rules. Fatemi says a year ago some period Knightsbridge houses were changing hands at £2,500 a square foot. This has fallen 40 per cent to £1,500-£1,600. The average UK price is £300. Period houses on three or more storeys and without a lift are languishing on the market, for those longing for Regency era Bridgerton-type elegance. Overseas investors pay 19 per cent stamp duty on a second home amounting to a £4.6 million stamp duty bill on a £25,000,000 house. This falls to £2.9 million for a UK buyer who does not own another home. However, Fatemi warns: 'There is only a four-to-five-month window of a good supply of homes because another influx of American prime central London househunters has started.'
Khaleej Times
02-06-2025
- Business
- Khaleej Times
The global tax game: How UAE is winning while London forgets its own playbook
In any game, it's not just how you play — but how others play — that can work to your advantage. This perfectly captures the ongoing shift in global tax dynamics, particularly in the United Kingdom. According to the 2024 Global Migration Report, over 9,500 high-net-worth individuals (HNWIs) have exited the UK — a number that is only expected to grow. One of the most significant catalysts for this exodus is the upcoming overhaul of the UK's non-domiciled (non-dom) tax regime, effective 6 April 2025. Let's break down what's changing—and why the UAE stands to gain the most. What Was the Non-Dom Regime? Until 5 April 2025, UK residents who were classified as non-domiciled could benefit from the remittance basis of taxation. This meant: They were only taxed on foreign income and gains (FIG) if these were brought into (remitted to) the UK. This allowed wealthy individuals to accumulate global income offshore without facing UK tax obligations - so long as they kept the money abroad. This system made the UK attractive to wealthy foreigners. But the landscape is about to shift. What's Changing from 6 April 2025? The UK government is abolishing the concept of domicile as a key factor in taxation and replacing it with a residence-based system. The key changes include: End of the Remittance Basis: All UK tax residents will be taxed on their worldwide income and gains, regardless of domicile status, after a transitional period. Transitional Relief: o For 2025–2026, only 50% of foreign income will be taxed if switching from the old to the new system. o A special 12% tax rate applies to foreign income earned before 6 April 2025 if remitted in the 2025–26 or 2026–27 tax years. Ultimately, after four years of UK tax residence, individuals will be taxed like any other UK resident—with no FIG exemptions. Who will this impact the most? These changes primarily affect HNWIs and global families who historically relied on the non-dom regime to protect their offshore wealth from UK taxation. The shift not only undermines long-standing tax planning structures but also reduces the UK's appeal as a global hub for mobile capital and top-tier talent. How the UAE stands to gain As capital chases efficiency, tax policy plays a decisive role in location selection. The UAE, with its 0% personal income tax regime, robust financial infrastructure, and world-class quality of life, emerges as a natural haven. Here's why the UAE is poised to gain the most: Strategic location: Needless to mention not just close to Europe - but at the crossroads of East and West, connecting global markets with ease. Stability and predictability: In a rapidly changing tax world, the UAE offers clarity, consistency, and long-term visibility for individuals and families. With a bold vision and cautious implementation of compliances, it emerges as a strong contender. Transparent and rules-based Golden Visa regime: Unlike jurisdictions such as Singapore - where the PR process is often seen as opaque and discretionary- the UAE has published its Golden Visa rules in black and white, creating a rules-based and inclusive system that welcomes both wealth and talent. Limited competition: With Hong Kong effectively out of the race due to political and regulatory concerns, and while traditionally leading in the race, Singapore, it's PR regime becoming increasingly restrictive, the UAE is among the very few jurisdictions offering competitive, clear, and welcoming advantages. The bigger picture: The global tax game The UK's tax reform is part of a larger pattern: nations are rewriting tax codes to balance fairness, revenue, and global competitiveness. But when one jurisdiction tightens its rules, others gain ground. For the UAE, this is not just a short-term win - it's a long-term opportunity to attract global talent and wealth. Follow us for more insights in our series: The Global Tax Game —where we explore how countries are competing to attract capital through smarter tax policies.
