VISIT London City airport early on a Monday morning and you witness one of the great migratory patterns of Europe – the weekly flight of the well-paid European banker to his Square Mile feeding ground, writes Dominic O’Connell.

And not just bankers. All types of City professionals – analysts, fund managers, lawyers, and just wealthy individuals – take advantage of Britain’s rules on “nonresident” tax status to live and pay tax in a foreign country, but work in Britain.

Changes by Alistair Darling to the detail of the residency rules could stem the flow. Tax experts say the changes could nearly halve the number of working days available to these individuals before they risk becoming liable for UK tax.

Individuals can claim not to be resident for tax if they work in Britain for fewer than 183 days in a single year, or an average of 91 days a year over four years.

The Revenue at present allows a travelling day to be exempt. So a banker resident in Monaco, for example, can come to London on Monday morning, return on Friday night, and have only three days count towards his total.

Darling plans to scrap this element of leniency. In future, travelling days will count as working days. The Monaco banker’s visit would count as five working days.

Henry Fea of the law firm Charles Russell, said this could have a significant impact on nonresidents: “A typical nonresident would be in the UK from Tuesday to Friday. Under the old rules that would count as two days, so they would have 40 working weeks to build up their 91 days. The new rules give them 20 weeks.” “It will cut into the time they can work in the UK if they want to retain nonresident status,” said Robby Hilkowitz, executive director of the Stonehage Group, which advises wealthy families.

One City headhunter said the change could have a “dramatic” effect. He said: “The City has been such a huge success because all the specialists in particular areas are here – bankers, lawyers, accountants. If some of them choose to take their work elsewhere for tax reasons, you start to lose that critical mass, and London loses its appeal.”

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