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Will non-dom entrepreneurs leave Britain?

by Catherine Woods - Wednesday, 13th February 2008

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It's been revealed non-doms will only be taxed on the earnings they bring into the UK and not their worldwide tax affairs. These affairs had been caught under the previous policy announced in that contentious pre-budget report last year.

However, non-doms who have lived in the UK for seven years will still have to pay an annual tax of £30,000.

CBI deputy director-general John Cridland says the announcement is a “victory for common sense”. He adds: "The proposals were clearly cobbled together in a hurry and went a lot further than the £30,000 headline figure, with the clauses on trusts and the retroactive aspects for taxing gains particularly punitive.

"It was not just a tax on the 'super-rich' but affected tens of thousands of accountants, lawyers and managers who work hard in the UK and help generate huge amounts of wealth for the economy and the Treasury."

PKF national director of tax Lisa Macpherson supports the change but adds, rather scathingly, that “the way this legislation is being introduced is causing confusion and chaos”.

“We are facing a situation today where clients are liquidating off-shore companies and trusts, which they may not have needed to do. It currently isn't clear what taxpayers should be doing. Should they be staying or leaving?”

Macpherson urges the government to delay the introduction of the legislation, while Cridland says: “We need the government to be more careful in future about sending out a message that Britain is no longer interested in attracting talent and ideas to our shores, or that those people already here, who contribute over £23bn to the UK economy each year, are no longer welcome. It should be saying the reverse."

Sound familiar? One of the main arguments against the government's capital gains
tax proposal was that it could prompt the people who help drive the UK economy forward to relocate to countries where the legislative environment is more conducive
to business.

As the Supper Club founder Duncan Cheatle said when the new CGT plans were announced: “It’s easy for them to relocate.”

Picture source

Tags: john cridland, labour government, capital gains tax, pkf, lisa macpherson, the supper club, pre-budget report, duncan cheatle, non-domiciled residents, non-doms, cbi, non-domicile, annual tax,

2 Comments

February 15, 2008 8:10am
elly ongoma Says:

It's amazing that Britain of all countries would introduce measures that really amount to 'shooting oneself in the foot!' in this ag of competitive advantage in the business environment driving investment destination.

February 14, 2008 10:43am
Matthew Rock Says:

One sign of the times is at the blue-chip charity auction evenings, which traditionally rely on the uber-rich to support the causes. These are already seeing a slowdown in sums raised. Last week I went to one, which had supercharged bidding the previous year, but this year only two big bidders participated. I heard from the CEO of a major global corporate last week that some non-doms are already packing up and leaving. Personally, I don't believe this is altogether to do with non-dom taxes: the overall slowdown in the UK financial services sector simply means that the action is moving elsewhere. And where the money goes, the super-rich soon follow.

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