Britain’s wealthy non-residents urge Italian-style tax system to prevent wealth leakage | Wilnesh News

LONDON – Britain’s super-rich are urging the government to introduce an Italian-style flat tax to stem the flow of wealth as their preferential status is threatened in the upcoming budget.

The Foreign Investors Association, a lobby group of non-residents and their advisers, along with think tank Oxford Economics, have proposed a graduated tax system (TTR) that would charge wealthy foreigners a single annual fee in exchange for Exemptions from inheritance tax (IHT) apply to non-UK assets and UK tax on overseas income and gains for up to 15 years.

Such fees will be levied based on a person’s net wealth, with a proposed annual fee of £200,000 ($260,447) for those with a net worth of less than £100 million, and £2 million for those with a net worth of more than £500 million.

This is different from the Italian regime, which charges Recently doubled 200,000 euros per year regardless of wealth level.

Foreign investors in the UK are due to meet government officials on Thursday to discuss the proposals.

“If there is instability, people will now be making plans to leave,” Leslie MacLeod Miller, chief executive of Foreign Investors UK, told CNBC on Wednesday at an event announcing the proposals.

British non-domestic status is a colonial-era tax rule that allows people who live in the UK but live elsewhere to avoid paying tax on income and capital gains from overseas for up to 15 years. As of 2023, it is expected 74,000 people The number of people with this status is up from 68,900 last year.

Although the regime has long been politically controversial, it has been under pressure in recent months since Labor took power in August. announced plans Accelerate plans to abolish non-resident status by banning the use of trusts to protect overseas assets from IHT.

Meanwhile, Finance Minister Rachel Reeves is expected to announce significant tax increases in the budget on October 30 as she seeks to end the current report The public finances funding gap amounts to £40 billion. The Treasury Department did not immediately respond to CNBC’s request for comment on the funding gap or upcoming talks with FIFA.

Reeves has previously said scrapping the program could create £2.6 billion ($3.38 billion) to the Treasury during the next administration.

However, research by Oxford Economics last month warned that the schemes could cost taxpayers £1 billion in direct revenue alone by 2029/30. Overall, the 72 non-residents surveyed are estimated to have invested a total of almost £8.5 billion into the economy since arriving in the UK

“This is only a small proportion of non-resident investment, so there is risk in this investment,” Alex Stewart, associate director at Oxford Economics, said on Wednesday.

In fact, some are already taking preemptive action.

New research published by the economic think tank on Wednesday showed that non-residents who took part in the survey had withdrawn at least £842.2 million in anticipation of the changes.

Several non-locals who attended the event but requested anonymity said they were considering relocating to jurisdictions such as Italy, Switzerland and Dubai if a tougher plan was adopted.

According to Wednesday’s research, which surveyed 115 non-residents and 42 advisers, around one in 10 (13%) would still go ahead with plans to leave if TTR was introduced, while 98% said they would If the proposed apartments they would leave – no tax system was introduced.

“Those with the broadest shoulders usually have the longest legs, so it’s important to understand them,” says McLeod-Miller.

Dominic Lawrance, partner at Charles Russell Speechlys, said the schemes were an “improvement” on the Italian system as they would be scaled according to wealth classes, thereby generating additional tax revenue. Lawrence, who helped draft the proposals, added that they should be introduced alongside existing measures to abolish non-domiciled status to “avoid any sense of a sea change”.

Oxford Economics said it was currently working to estimate how much revenue the TTR proposal could generate.

The Labor government expressed determination to tackle the problem The unfairness of the tax systempromised in his election manifesto to end Non-resident tax loopholes. However, it has since seemingly softened its stance, with Reeves reportedly reconsider Some of her non-dom suppression.

British Prime Minister Keir Starmer convened 300 business leaders on Monday at Labour’s first international investment summit, seeking to establish the UK as a center of growth and wealth creation.

London Mayor Sadiq Khan told CNBC at Monday’s event that the government must proceed carefully to avoid alienating wealth creators while ensuring they “play by the rules.”

“We need to make sure we understand that we need wealth creators in London and in our country. We need to understand that we need people to invest here and create the jobs, wealth and prosperity that we want,” Khan said.

“The key mission of this government is growth, and we can’t achieve that without the investment of the people as you say. I hope people feel reassured by the Prime Minister’s remarks,” he added.

City of London Mayor Michael Mainelli acknowledged on Monday there were “problems” with non-dom rules but noted the UK should continue to have a “competitive tax system”.