Tax changes and Brexit are forcing non-doms to consider quitting the UK for good, putting billions of pounds of tax revenue at risk, according to research from Moore Stephens
The firm says 46% of the non-doms it surveyed reported they are considering leaving the UK in the near future. The number of those thinking of leaving the UK permanently rose from 37% at this time last year, while 10% have already left.
Of those who have already relocated from the UK, the most popular destinations were the USA (29%) and Monaco (14%). Similarly, those who are planning on leaving said that Switzerland (14%), USA (10%), and Monaco (7%) were the most attractive options.
Moore Stephens says the UK has become significantly less attractive to non-doms in recent years, who pay up to a £90,000 annual charge should they wish to be taxed on a remittance basis.
The government has just published an updated Finance Bill confirming its intention to introduce further reforms to the tax rules for non doms with effect from 6 April 2017. The new laws will see non-doms who have been resident in the UK for 15 of the past 20 years become ‘deemed domiciled.’ This means they will be treated as if they were UK citizens for all tax purposes, resulting in them paying more tax than they do currently, with the exception of certain trust arrangements.
Moore Stephens’ research found that half (53%) of non-doms said that more competitive tax rates would persuade them to remain in the UK.
The firm cites HMRC figures showing that UK non-doms contributed £9.3bn in tax and national insurance receipts last year, as well as employing thousands of UK citizens through their businesses, and argues here could be a significant revenue loss and talent drain should non-doms continue to leave the country.
Moore Stephens says that non-doms may also be wary of remaining in the UK post-Brexit as the country faces a potentially weakened trading position. Many non-doms come to the UK as a gateway to Europe, but ease-of-access to the EU could be reduced following Brexit negotiations.
Simon Baylis, partner at Moore Stephens, said: ‘It’s clear that non-doms have serious concerns about their futures in the UK.
‘Many non-doms have been squeezed by tax law changes over the last decade or so, but Brexit could be the tipping point.
‘If half of the non-doms choose to leave the UK – as our research suggests could be likely – the government could lose close to £5bn in revenue.’
Report by Pat Sweet
