UK's 'non-doms' quit for Dubai and other 'attractive' destinations

Live updates: Follow the latest news on the UK general election Wealthy residents who register their permanent home overseas are fleeing the UK for locations such as the UAE over Labour’s promised clampdown on so-called non-doms, a city wealth lawyer has warned. For more than 200 years, the system, which was recently overhauled by the Conservative government, allowed wealthy people to live in the UK and avoid paying tax on their overseas income. But Labour – which looks set to win an overwhelming majority in Thursday's general election – has vowed to close the “ non-dom tax loophole ”. The treasury security, Chancellor of the Exchequer Jeremy Hunt , announced in the spring budget the scheme would be replaced from 2025 and new residents would not be required to pay tax on foreign income and financial gains for only the first four years of their time in the UK. But after that period ends, those who choose to stay will pay the same rate of tax as other residents. But Labour claimed the policy did not go far enough, saying as it stood non-doms would receive a discount of 50 per cent on the foreign income they bring into Britain in the first year. Shadow chancellor Rachel Reeves said Labour would carry out a “crackdown” to make sure “every penny” goes into the National Health Service and schools. In 2022, the then-chancellor Rishi Sunak's wife Akshata Murty, an Indian citizen, announced she would pay UK taxes on all her worldwide income after it was disclosed that she was non-domiciled in Britain for tax purposes . Alessandro Belluzzo, a barrister and founding partner of Belluzzo International Partners, told The National: “We know with the Conservatives that they’re going to change it, they proposed the changes and the changes were quite clear. They are coming from the concept of domicile to residency.” There is no clarity about what Labour will do, he added. “Will Labour cancel completely all rules to attract international people? Because I am not talking about dom or non-dom,” said Mr Belluzzo. “This concept is finished. It’s no longer applicable. What I am saying is, is the UK still a possible platform for international people? Will people be attracted by the UK? Is there any kind of plan Labour will put forward?" If Labour cancels all proposals then the country might have a problem, he said. “Many people who came to the UK were not British. But they have done pretty well here, so why cancel the attraction?” he added. David Lesperance, a taxation and citizenship adviser, and managing director of Lesperance and Associates, told The National there are essentially two types of non-doms: foreign citizens who work in the City of London, who derive most of their income from the UK and are unlikely to leave as a result of Labour's new plan; and ultra high net worth individuals (UHNWIs), who are foreign citizens and almost certainly will leave. UHNWIs do not need to remain in London to make or maintain their wealth and can arrange their affairs to ensure they have minimal foreign income. "However, with Labour's announcement regarding protected and excluded property trusts, exposure of worldwide assets to 40 per cent inheritance tax is a major shove out the door for this group," Mr Lesperance said. "As a result, they are highly likely to leave the UK." Up to 30 per cent of current non-doms are predicted to leave, according to estimates. Mr Belluzzo said he knows of families already fleeing the UK. “If you talk to people they say there are many people moving now, because entrepreneurs, families, they don’t wait for the politicians to choose for them. They prefer to choose themselves if they decide the UK is less attractive for them,” he said. Nom-doms are moving to places such as Italy, where Mr Belluzzo helped develop a flat rate of tax for non-domiciled residents of €100,000 ($107,320) in 2017, Monaco, Switzerland and the UAE , all of which offer incentives to wealthy investors looking to move. Mr Belluzzo’s company recently opened an office in Dubai in response to requests from clients. “I think the system is very well organised. People are going there,” he said. “And they are going there for the same reasons people were coming to the UK 20 or 30 years ago, for an opportunity, for business, because they see there is an openness to business. “And we see a lot of people moving to Dubai and Abu Dhabi, to the region.” Mr Belluzzo said Labour should signal that it is open to international investors in the early days of a new government, if it is successful in the general election on Thursday. He said the UK has always been a welcoming country and he wants it to remain competitive. “Labour is just saying we will scrap the non-doms and that’s it. “But are they going to do something else afterwards? I believe so. I hope so.”

UK's 'non-doms' quit for Dubai and other 'attractive' destinations

Labour has vowed to close the 'non-dom loophole' if it wins power on Thursday