FT: Wealthy foreigners set to quit Britain over tax

Good !!!!!!

al those sellers of blacked out 4*4 will be gutted

By Vanessa Houlder

Financial Times Published: December 6 2007 21:33 | Last updated: December 6 2007 21:33

Some 3,000 wealthy foreigners will leave Britain as a result of the planned clampdown on their beneficial tax regime, the UK Treasury has admitted.

Under plans announced in October, foreign citizens based in the UK who are exempt from tax on their offshore income, the so-called "non doms", will face an annual charge of 30,000 (?41,600) once they have lived in Britain for at least seven years. The Treasury also intends to close the loophole under which they can escape capital gains tax.

The plan, which is due to come into effect next April, is politically popular but has faced criticism that it will damage London as a financial centre and would persuade some of the super-rich to leave. The Chartered Institute of Taxation has said that the proposed capital gains tax changes would have "a profound impact on the housing and art markets in London as well as its pre-eminence as a financial centre".

The Society of Trust and Estate Practitioners, which represents tax advisers, said its members have reported dozens of foreign clients deciding to leave the UK. In a consultation paper published on Thursday, the Treasury acknowledged that up to 3,000 people could leave over the long term. But it denied this would damage the financial services industry, where most international staff would leave before the seven-year grace period elapsed.

It calculated that about 4,000 people would pay the 30,000 fee that would allow them to keep overseas gains and income out of the UK tax net. But it said it had struck "the right balance bet-ween competitiveness and fairness". The Treasury also predicted about 17,000 non-residents would be brought into the British tax net as a result of tougher rules for calculating days spent in the UK. It said weekly commuters who arrive in London on Tuesday and depart on Thursday would be deemed a UK resident.

This is a made up figure used to calculate the required "Impact Assessment" of a particular statute change.

The treasury has a very poor record on getting it guesses wrong for its Impact Assessments and ISTM that this one is harder than normal. Quite why they have them when it is so obviously they are usually wrong, is beyond me.

I suspect that nobody has the slightest idea of the number of people who will leave because of this change. Whilst there is lots of bluster from people threatening to leave in order to derail this legislation, as I have pointed out before, there is nowhere else for them to go that has similar rules and the UK's economic/social activity. I doubt that many of the players that matter will leave.

tim

What if they do?

What is their contribution here?

We don't know do, we? No-one does.

Their tax contribution is going to be close to nil. The theory is that they make a contribution to the business economy that will leave if they do, but is that really the case?

If a foreigner is operating a (large) business in the UK, it is most likely because that is the best place for the business to be located, not because it is where they are personally located. There are lots of people who manage a business remotely. I really don't buy this idea that if Mr non dom, non taxpayer, leaves 4000 tax paying jobs will go too. BICBW

tim

messagenews:ASW6j.14639$ snipped-for-privacy@newsfe4-gui.ntli.net...

Do other countries have similar rules to those proposed for the UK..?

If not I could easily imagine people relocating.... I find it harder to imagine it will make a difference.

Not sure I understand why it is considered a 'loophole' to pay no UK tax on foreign earnings as those earnings will presumbly be taxed where they are earned.

I don't think we are desperately concerned if tax is paid elsewhere, if we are unlikely to benefit.

It is a loophole if wealthy foreigners somehow manage to avoid liability to pay UK taxes while they are here, like everyone else.

No. Most other countries have a system of taxing ALL world wide income remitted or not.

There is no country (except Ireland) that has anything close to the UK's system. There are countries that have generally very low tax. But this affects earned income as well, so many of the non doms could already move to these places and save tax, but they haven't, so why should a 30K UK charge make them?

Not always.

tim

My current employment in london is purely there because of a non-dom being resident there, I doubt there's any chance it would be in London if not for that fact.

Jim.