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Angry “non-domiciled” workers are threatening to leave Britain in protest at
the Chancellor’s plans to clamp down on tax avoidance by charging a £30,000
flat fee to stay outside the country’s tax system.
The proposal will jeopardise thousands of jobs and lead to a brain drain,
industry leaders have cautioned. Concern is growing that Alistair Darling’s
proposal to charge a flat fee to non-doms who have stayed in the UK for
seven years will spark an exodus.
One City-based Greek investment banker said the proposal meant he would not
stay in London after seven years. “I’m not in London for the weather,” he
said.
A Swedish banker said: “The plan has created a great deal of uncertainty.
People are saying ‘what will stop the authorities continuing on that trend
and increasing the fee?’ and questioning whether it’s worth it. I have been
here for most of my working life but we may decide it’s not worth staying.’’
So far, the spotlight has fallen on the super-rich, including high-profile
figures such as Sir Philip Green, the retail entrepreneur, and private
equity bosses. But tax experts have said that middle-ranking wealthy
professionals, who do not see themselves as part of the elite, are more
likely to feel the pain from last week’s PreBudget Report.
Alex Henderson, an accountant at PricewaterhouseCoopers said: “There will be a
class of people who may not even think of themselves as wealthy but who will
be made a lot worse off.”
The shipping services industry said that the plans could drive away the
international magnates on whose business the sector depends.
Jeremy Penn, chief executive of the Baltic Exchange, said that charging an
annual fee to non-doms would jeopardise 15,000 jobs and significantly reduce
earnings of £800 million in the ship-broking industry alone.
He said: “The maritime services industry is very valuable to the UK economy
and a considerable portion of that arises from the fact an international
group, particularly Greeks, is based here in London.”
David Asprey, the head of policy at the British Chamber of Shipping, said:
“They make such an enormous contribution to London being the world’s
maritime capital that we would be concerned about it. We would say, frankly,
they’re making a bigger contribution by being here than they would by paying
tax on their other business interests. Experience tells us that if you have
a penal tax system on people who choose to be here they will choose not to
be here.”
Individuals with links to other countries are allowed to declare themselves
non-domiciled, exempting income earned abroad from tax. But after April,
nondoms who have stayed in the country for seven years will have to pay a
fee, expected to be £30,000, or pay tax on overseas earnings.
While the fee will be considered small change for high-profile super-rich non-doms such as Lakshmi Mittal, the steel magnate, and Sir Philip, the Top Shop founder, accountants say it will hurt many lower-paid foreign workers, including doctors and teachers.
It is estimated that an individual would have to have more than £1.5 million
in assets abroad before it was worth paying £30,000 to retain non-dom
status.
Mike Warburton, head of tax at Grant Thornton, said: “It won’t bother the
super-rich because it’s not a lot of money for them and it won’t bother the
Polish plumber, because they’ll be taxed on their British salary regardless.
But it will be very relevant for people that have assets that they save up
offshore. For example, one of my clients is an Indian doctor who has been
prudent and saved up around £1 million, which will now be taxed because it’s
not enough to make it worthwhile paying £30,000.”
An executive for a leading private bank said that a major concern was the
prospect that, by electing to pay tax on their overseas income rather than a
£30,000 flat payment, individuals could forgo other valuable benefits. “
At the moment, non-doms are also exempt from paying inheritance tax on their
overseas assets,” he said. “It has not been explained whether non-dom
status, and the exemption from inheritance tax, will be lost if they decide
to pay tax.”
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As a non-dom, firstly I would like to point out it is understandable this government tries to impose a higher tax burden on us. It is hard to disregard public opinion. However, secondly, I also would like to point out it is completely fair we try to optimize our after-tax revenues and income as anybody does.
Belgium and Germany do not impose any capital gains tax, whether dom or non dom. France has just introduced a tax rebate for attracting foreign entrepreneurs and highly skilled workers, as has Spain. The Netherlands, Luxembourg and Switzerland have had such a system for a while.
As for myself, reading the press, I think this is a turning point. We have started by moving the head office outside of the UK and we are shifting about half of the jobs which I created out to the new location. I like the UK, but this is clearly no longer the place to be as an entrepreneur. I wonder who is going to compensate for the +/£10 mio of tax we will now pay in Belgium.
Johan, london, UK
They will have to get accustomed to paying tax. If UK business really value's the non domes skills the organistions will reward them, with higher pay. Instead of having non dom status to ensure a suitable wage.
seamonkey, southampton, UK
Like many other North Americans I left Ireland when they decided to tax foreign source income at the local rate. Now I have to leave here in 6 years. I have brought investment and created jobs in both countries. The main reason for being in either country was the tax structure, not the cost of real estate or the talent of local workers. UK politicians should look at what happened to the securities and banking industry in Ireland when they announced that non-domiciled workers would be taxed on foreign source income. Within 8 weeks of the rule change a major bank relocated its structured products business to Singapore. Since then dozens have pulled out of Ireland. As a group we will never use your pension system, are not eligible for welfare, don't use the NHS, and never made use of your education system. What we have done is create wealth and employment in your country. If I am going to pay high taxes I will go home and pay them there.
Joe, London,
As a 'non-dom' I'm suriously considering how much longer I will stay in this country. I have assets in my home country of Australia which I pay tax on to the Australia government why should I have to pay a second lot of taxes to the UK government on this income! To the best of my knowledge Australia doesn't make British citzens resident in Australia pay tax on their worldwide income if tax has already been paid on it.
Emma, London,
Call the Non Doms' bluff!
I don't believe that anyone who is a bona fide magnate with millions of pounds in overseas assets, will not find it worthwhile to pay the £30K fee. For the less wealthy non-doms, they're probably here to work in the strong London economy, probably earning good wages and are, despite the hot air, won't leave London so long as its open economy and jobs market thrives.
Mark L, Manchester, England
Many of these non-doms generate a huge amount of business for britain and also jobs. As well as this their companies pay corporate tax. So if we force them to move away, then they will take jobs and their companies with them so Britain will be the loser. The simple solution is to remove the ability to be a non-dom and make everyone who generates money while living in the UK be liable for UK income tax. Why do politicians insist on making things so complex.
Sanjay Mazumder, Palmers Green, London, UK
As a nondom, let me express my point of view. The point that you guys are missing, is that the tax concession is an incentive for us to come here and bring skills, and in particular tax income that Britain would otherwise not be seeing at all. The money and skills that we bring are far more valuable to Britain that the tax concession we get.
So the populist move to introduce a £30000 fee will rack substantially less money that what it will be lost by nondoms taking thir hard earned money somewhere else and the skill shortages Britain will be left with.
And as a side note - there's no inheritance tax in my home country, so if Britain were to extend inheritance tax to my foreign estate that would definitely be over the top!
marco, London,
Old story.....One law for the working class..
Another for the rich....but they want to pay nothing !
John, London, Uk
pretty much have to agree in the main with most other comentators, no one is irreplacable, there are more reasons than this that London is a commercial center.
Ben, folkestone, uk
So the people who have saved a million by not paying tax will now be on the same level as the rest of us. And the downside is ???????
si, london,
I agree with Lala, their threats are baseless. They've been spoiled by the sense of entitlement, while being a drain on the system. Don't weaken, as your obligation is to your citizens who have been stuck with an unfair burden.
Jenny, Grand Rapids, MI, US
Come on, how difficult are their jobs. They can leave, others will take their place and London will be a far pleasanter place without moaners and people who drive fast noisy cars.
Lala, london,