FT: Wealthy foreigners set to quit Britain over tax

Wealthy foreigners set to quit Britain over tax

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.

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