Up to 30 per cent of the UK’s non-doms could leave the UK if Labour wins this week’s general election, a top private wealth lawyer has warned.
Labour plans to tighten up on ‘loopholes’ in the Conservatives’ policy announced in the Spring Budget to abolish the ‘non-domicile regime’, an over 200 year old scheme that allows wealthy people to live in the UK and not pay tax on any overseas income.
Alessandro Belluzzo, who founded the wealth advisory Belluzzo International Partners, said that although it was the Conservatives that abolished the policy, Labour’s more draconian reforms are forcing many of his clients to consider a swift exit from the UK.
He told City A.M. “Labour will take away any kind of advantage for international people… with the Conservatives they had an opportunity of at least some tax advantages for the first four years, but Labour are closing those up.
“So for people who were not convinced about remaining in the UK, and were waiting to see what the policy was, they are now starting to move.
“It is difficult to quantify what percentage of non-doms will leave the UK in the next 2-5 years… but the current predictions vary from 10 per cent to 30 per cent.”
Labour’s non-dom policy goes further than the Conservatives, removing the right of wealthy foreign nationals to avoid taxes in their first four years of residency and avoid inheritance tax on foreign assets held in a trust.
Labour claims their clampdown will raise £2.6bn by the end of the next parliament.
But Belluzzo, who is also president of the Italian Chamber of Commerce, cautioned that removing these provisions is likely to force his non-dom clients to leave, thereby costing the exchequer in other areas.
“Since Brexit and Covid, London has changed a lot. Being in Europe but not in Europe, London used to offer the ‘best of both worlds’, with the pound, English law, while also having access to the single market et cetera,” he said.
“These benefits weren’t just on the tax and legal side, but on the lifestyle side, too… But people are now thinking, ‘is the UK still the best place to live, work and grow a family?”
The top three destinations for the UK’s non-doms are Switzerland, the UAE and Italy, which in 2017 introduced a flat rate of tax for non-domiciled residents of €100,000; a policy that Belluzzo helped develop.
Belluzzo said: “People are moving to Milan and Rome, and the usual other destinations like Monaco, Switzerland and the UAE.
“It will have an economic impact – there will be a decrease in government revenue from non-doms’ investment into real estate and day to day spending drying up.”
The Labour Party was approached for comment.