Lament of the non-doms: I can afford to live in Britain, but not to die here
- Raising inheritance taxes will cheat our children, say entrepreneurs
A lump sum to be paid every year could be the solution to the mounting challenges Chancellor Rachel Reeves faces in her fall budget plan to squeeze more taxes out of “non-doms.”
These are people whose permanent residence for tax purposes is outside Great Britain and therefore enjoy certain tax benefits.
A similar scheme in Italy – led by Prime Minister Giorgia Meloni – is luring non-doms from Britain and elsewhere who are willing to pay reasonable amounts of tax but unwilling to be punished.
What’s coming? Rachel Reeves will announce the Autumn Budget on October 30
Ahead of the October 30 budget, Reeves’ threat to impose inheritance taxes on the foreign assets of non-domestic countries has led to an exodus of these old-money families and entrepreneurs.
Currently, their estates are only liable for IHT on money earned in Britain and on UK property, including property held through foreign companies.
When one nun heard of the plan, he is said to have commented: ‘I can afford to live in Britain, but I can’t afford to die there anymore.’
In an embarrassment to the government, research by consultancy Oxford Economics shows that the Reeves crackdown would not raise the £2.6 billion hoped for, but would result in a loss of revenue of £900 million.
Policy: Non-doms are now being lured to Giorgia Meloni’s Italy
Non-doms create wealth, start businesses, support employment, and spend money freely on expensive goods and services. But up to a third could leave Britain, according to Oxford Economics.
Dominic Lawrance, tax specialist at law firm Charles Russell Speechlys, says existing non-doms – and those considering a move to Britain – are put off by Reeves’ desire to bring foreign assets into the IHT net.
Lawrance said: ‘It is seen as draconian and hostile – the straw that breaks the camel’s back.’
The rule change would apply to those who have lived in Britain for ten years – and continue to do so for another ten years if they decide to leave Britain.
Under Italy’s non-dom rules – which are attracting a number of people fleeing Reeves’ policies – an annual flat fee of €200,000 (£167,000) is levied on foreign income.
It is believed that the influx of non-doms to Milan brought a renaissance to the city, suggesting that a British plan could have the same effects.
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