When it comes to leaving countries in a hurry, Magda Wierzycka has plenty of experience.
At just 12 years old, the South African entrepreneur and her parents fled their native Poland under the the cover of night, becoming refugees after its communist government declared martial law.
Ending up in South Africa – via an Austrian refugee processing centre – she went on to become one of the country’s most successful entrepreneurs, founding and running the major investment firm Sygnia, while becoming one of its most recognisable anti-corruption campaigners.
That was, at least, until her assiduous activism forced her to move for a second time. In 2017 a whistleblower handed her a a drive containing over 500,000 emails that revealed the true scale of rank corruption and iniquity that lay at the heart of the South African government.
And after several tense conversations with lawyers, journalists and campaigners, she decided to release them – expediting the end of Jacob Zuma’s contentious tenure as South Africa’s President and bringing down UK PR shop Bell Pottinger in the process. Then, fearing for her safety, she fled to London with her family, using a luxury Park Lane hotel as a bolt hole.
Ultimately, her family would return to her adopted home, but the constant phone-tapping, threats on Twitter, and interventions from state security led Wierzycka to make London her home.
Her newfound freedom brought with it benefits spanning all corners of her life. She could now walk down the street without having to choose between fearing for her safety in South Africa’s febrile political climate or having a cumbersome security detail follow her around.
And not content with just sitting in an apartment, the restless billionaire and serial entrepreneur also set up a UK-based venture capital firm, Braavos Investment Advisers, looking to back the kind of long-term life science firms on which the UK investment community and risk-averse pension funds were loathe to take a punt.
In short: life was good – and usually tranquil – until last month’s Budget all but confirmed that she would need to start making preparations for a third involuntary international relocation. But not without a fight.
“This is not real”
“I was sitting, watching the Chancellor, going, ‘This is not real,’” the charismatic 55 year old tells City AM in a tone that is in equal parts anguish and despair. “These people don’t understand economics.”
The subject of her ire was not the high profile hike to national insurance, which for its part will raise the cost of employing her staff at Braavos and the housekeepers and gardening staff Wierzycka employs personally. Nor was she moved by the removal of business and agricultural relief, the reaction to which has dominated much of the post-Budget coverage.
Rachel Reeves before delivering her historic Budget.
Rather, it was the government’s decision to abolish the non-dom regime, an over 200-year-old tax status designed to attract wealthy foreigners by allowing them not to pay tax on their foreign income and assets, that most raised the hackles of the woman said to be the richest in South Africa.
The policy – which was first announced by Labour in 2022 when they were in opposition, and then coopted by the Sunak administration in this year’s Spring Budget – sparked panicked warnings and frenzied lobbying from non-doms, of which Wierzycka is one, and their advisors.
They argued that the highly mobile nature of the target demographic meant that – far from raising the £3bn that Labour claimed it would, scrapping the status would in fact cost the Treasury money (with some estimates putting the loss at £900m).
But despite the zealous rearguard action – led largely by a non-dom lobby group, Foreign Investors for Britain (FIFB), founded explicitly to rail against the changes – Chancellor Rachel Reeves went ahead with the proposals.
And for Wierzycka the decision was lamentable on both emotional and logical grounds.
Magda Wierzycka
“There’s a personal side – which is where my interest being a resident non-dom comes in – and then there’s another side of me, and that is that I’ve been investing money for 30 years,” she says. “And under the old scheme, it works perfectly. My South African assets [which include her 50 per cent stake in Sygnia] are taxed by South Africa, and my assets here [comprising Braavos and two properties] get taxed in the UK. It was beautiful.”
The headline change announced by Reeves was to replace the concept of domicile – that if a UK resident had lived here for fewer than 15 of the last 20 tax years their permanent home could be elsewhere – with a focus on residence. And rather than lasting up to two decades, the new scheme distinguishes between foreign income and assets vs domestic assets for just four years before they are deemed permanent UK residents.
The magnitude of that change notwithstanding, it was another reform, though – one which Labour opted to make to inheritance tax laws for non-doms – about which Wierzycka is most up in arms.
Under the previous regime, and under the reforms to the non-dom status announced by the Conservatives before the election, inheritance tax would not apply to assets owned by people claiming non-dom status that were held in a foreign trust.
But the new laws do away with that carve out, applying inheritance tax on the foreign assets of anyone who has been here for more than 10 years.
This change, Wierzycka says, has left her and the other non-doms she knows doing one calculation: “How many more years before the axe falls. What’s our deadline for being in the UK?”
As well as well as personal objections that make the changes unpalatable, there are also – the billionaire investor says – practical and diplomatic ramifications that make them unworkable.
“My husband still has to live in South Africa because it has foreign exchange controls,” she tells City AM.
I’m unable to move money out of South Africa without applying to revenue services. And South Africa has an inheritance tax, too. So my estate will have to start begging South African authorities to take my money out. And they’ll what that money for themselves.
That seemingly intractable problem is compounded by the fact that dividends she gains from her South African company Sygnia will now be taxed at over 60 per cent unless her “fight with revenue services in the UK to refund the 20 per cent paid in south Africa” is successful.
Despite a strong inclination not to, her bind has forced her to reassess her options so that she has an off ramp should no concessions be made between now and April, when the changes are set to be introduced.
“I really don’t want to leave the UK”
With a return to South Africa still off the table on safety grounds, the current shortlist is Greece, Italy and Switzerland, which all operate foreign national schemes redolent of old non-dom regime.
“I really don’t want to leave the UK,” she says. “I was in dreamland, until my tax advisors were all of sudden saying, ‘Okay, we have to have a plan, let’s put forward alternatives.”
Should Wierzycka choose to leave, the loss for the UK economy would spread much further than than just the (not insignificant) absence of her personal income tax bill.
Domestically, she employs several builders, gardeners and housekeepers who, she says, are “petrified” of losing their jobs should she leave. And while Braavos, her UK-based venture capital fund, would continue to monitor and support the fledgling life sciences firms it has already backed, she has put on ice fundraising activities for its fourth fund – worth millions of pounds – until she makes a decision. If the government’s non-dom reforms do go through without any compromises to the inheritance tax cut-off or dividend issue, Wierzycka has vowed take that funding round “to a destination that will welcome the support for the most risky investment space”.
But despite this ultimatum, the well-connected businesswoman, whose clean cut, demure appearance belies a pugnacious mindset, claims that of the many South African non-doms she knows, she is one of the most reluctant to leave.
“They’re all leaving”
“They’re all in the same situation as me, and some have already passed 10-year inheritance tax deadline making it even harder to stay.
“One friend [one of the richest men in South Africa, who was based in the UK] called me last week asking to go for dinner. I thought, ‘Absolutely, we’re neighbours.’
“And he says to me, ‘No, I’m in Geneva. I’ve relocated to Geneva.’”
“No one is waiting. I’m waiting because I so badly don’t want to leave. But other people are not.”
Non-doms are threatening to leave the UK after the budget. (Lear Jet 60 performing a high performance launch.)
Wierzycka is aware that the non-doms’ cause is not one that most people will immediately leap to. The Institute for Fiscal Studies’ Paul Johnson branded much of the post-Budget furore as “special pleading by some extremely wealthy people”, during an interview on Times Radio.
And the respected academic Arun Advani, whose papers on non-doms are said to have inspired the government’s current reforms, argues the old system discouraged has many flaws. Namely, that it implicitly discouraged inward investment by taxing claimants on their UK income and gains but not foreign assets, and that it the benefits only applied to those who claimed their permanent home was abroad; thus discouraging claimants from laying permanent roots.
But Wierzycka believes that, these reservations not withstanding, the government should apply more pragmatism to the changes, rather that pursuing an “ideological” approach that doesn’t factor in real-world responses.
She believes a tax based on individuals’ net worth, like the one in place in Switzerland or the Tiered Tax Regime (TTR) being proposed by FIFB, would have helped avoid the mass exodus which she has witnessed among her contemporaries while also raising more money. The lobby group’s proposal, which has been criticised by Advani in the past, would see wealthy foreign residents pay a flat rate of annual tax in bands that span from £500,000 to £2m based on their overall wealth.
“The TTR was, I thought, a pragmatic solution: tax people based on their wealth. Don’t chase people away who can invest in this economy,” she says. “I will fight against these changes tooth and nail.”
City AM understands that FIFB’s leadership – having compared the Chancellor’s plans to Liz Truss’s fateful mini-Budget in a hastily compiled press release – are continuing to make passionate representations to key members of the Starmer administration, including the Prime Minister’s business adviser Varun Chandra.
The group has also released new research – out today – with modelling that suggests its TTR proposal will raise £680m. It would also – the study claims – lead to a 61 per cent rise the UK’s non-dom’s population.
All the while Wierzycka – whose life to date has been shaped by hasty relocations – continues to hope she doesn’t end up having to make a third hurried exit.
Or, as she puts it: “I’m waiting for a miracle. Because I still believe in fairy-tales.”