Come back non-doms, all is forgiven
I write this sitting in the morning sunshine in a cafe in central Milan, where I’m one day into my new life as a beneficiary of their special tax regime for high net worth individuals, meaning that in exchange for a mere €200,000 a year I can protect my overseas sources of wealth and income from Italian tax, including inheritance tax.
OK, that’s not entirely true; I’m just a humble visitor on a Spring city break.
But, as I look around the Via Monte Napoleone, I do wonder how many of these well-heeled shoppers were, until recently, London-based non-doms. Aston Villa’s billionaire owner, Nassef Sawiris, has just swapped Britain for Italy, and he’s far from alone. Advisors to the globally mobile mega-rich say Italy is high on the list for those leaving the UK in response to the government’s unravelling of the non-dom regime. I’ve heard of London firms dispatching staff to Milan to act as a dedicated concierge for their clients moving to the fashion capital, assisting with everything from property purchases and interior design to school places and paperwork.
The UK only has around 70,000 non-doms, and that number is falling fast. More than 11,000 millionaires (including 78 with liquid assets worth more than £100m) along with 12 billionaires left the UK last year, the biggest annual outflow in a decade, casting doubt (to put it mildly) on the Treasury’s claim that their reforms to the non-dom system will bring in billions in tax revenue.
As British billionaire John Caudwell said recently, “It’s one thing if all they’re doing is paying big restaurant bills and employing their nannies here, but we don’t want to lose the wealth creators.”
This is particularly true now, at a moment of huge international disruption and uncertainty. The UK should be doing everything it can to restore a competitive edge. As shadow business secretary Andrew Griffith wrote in City PM earlier this week, “when these golden geese leave, the Treasury is left with a catastrophic hole which will need to be plugged with more taxes from everyone else and more cuts to front-line services.” He says the US tariffs and emerging global trade war offers the government “the perfect chance to reverse” their “prejudiced attack” on the internationally mobile.
Getting the red carpet out of storage and rolling it back out might make painful politics, but it would be smart economics.