Amidst speculation that the number of Non-Doms leaving the UK is substantially lower than first feared, Knight Frank has been speaking with an expert about the issue.
Tom Bill, head of UK residential research at Knight Frank, has spoke with Leslie McLeod-Miller, chief executive of Foreign Investors for Britain (FIFB).
Bill says: “Wealthy overseas investors will be watching political events unfold over the next few months with particular scrutiny. The key focus is whether the government will tweak rules that have replaced the centuries-old non dom regime. Specifically, they will want to see a softer stance on applying UK inheritance tax (IHT) to assets held overseas.”
With party conference season kicking off next month, he added, investors will be hoping for some good news.
“Under the previous regime, non-doms could live in this country without paying UK tax on their overseas wealth. As well as the IHT proposals, the new rules impose a residence-based framework with a four-year time limit.”
In a discussion with Bill on the latest ‘Intelligence Talks’ podcast, McLeod-Miller suggests that the current Labour government proposals remain unchanged, more wealthy individuals can be expected to depart the UK, with a subsequent drop in tax revenues.
“It’s absolutely true that those with the broadest shoulders should bear the greatest burden,” McLeod-Miller remarked. “But those with the broadest shoulders normally also have the longest legs, and they are highly mobile.”
He suggests that investors are also concerned about speculation around a wealth, adding: “We are urging the Chancellor to confirm there will not be a wealth tax. So far, she has refrained from doing so but that is a dangerous thing. Historically, it’s clear that wealth taxes simply don’t work.”
With additional speculation surrounding Inheritance Tax rule changes in the upcoming Budget “the narrative has to be that the government needs to find more money order to maintain its promises, to help the ordinary working person, to provide things like school meals, and dentistry services.”
Bill developers the argument, saying: “Part of the lobbying efforts include trying to convince the government about the merits of an Italian-style flat tax. Under a so-called tiered tax regime, investors would pay an annual sum to stay in the UK. The concept could eventually take the form of an investor visa.”
And McLeod-Miller adds: “If you look internationally, what are governments doing? They know they need to drive growth in their countries and so they are saying ‘come to me, come to me,’ which is what Trump did with his golden visa. Overall, people would be prepared to pay a premium for staying in the UK. “If more people leave, the only thing left for the government to tax will be ordinary working people.”
McLeod-Miller is also pressing Chancellor Rachel Reeves to rule out a wealth tax in her budget. “We are urging the Chancellor to confirm there will not be a wealth tax. So far, she has refrained from doing so, but that is a dangerous thing.” He points to failed wealth tax experiments in France, which lost 12,000 millionaires between 2000 and 2016.