There have been numerous stories in the media recently stating that the record drop in the number of wealthy non-doms arriving and departing from UK has been the fault of Brexit and the fear of a Labour government under Jeremy Corbyn.
Whether you are a remainer or a leaver, a Tory voter or a Labour voter, you want the media and the politicians to just start trying to tell the truth. Unfortunately, there seems to be a huge decline in trust these days. The problem with news surrounding Brexit is the scaremongering: will there be lettuces after Brexit? Will there be shortages of medicines? The constant fear tactics practiced by politicians over the last few years means to end any semblance of truth is to look beyond their words to the numbers as this seems a good place to start (but even this must be with caution as they often spin those). The blame of the non-dom departures is yet another clear example of this misinformation by politicians all round without an iota of care for the human cost.
Let’s go back a few years and look at where the decline began. There was no reason for George Osbourne to change the non-dom rules when he was Chancellor; yet he did. He was frightened that the misinformation being doled out by Labour and the anti-foreign sentiment welling up in the Tory party would be a vote catcher and in order to head off any chance of losing voters he changed the rules.
He was simply pandering to a large number of the electorate who had been influenced over the years in to believing that non-doms were receiving preferential treatment as taxpayers, and not contributing suffciently to the economy. It’s true they were getting preferential treatment in respect of their worldwide income which was not taxed if not remitted to the UK as well as other benefits. However, as has become common place, the full story was not explained. Those pushing for change in the rules had their own agendas and benefiting the UK populace was not one of them.
The result was that he changed the rules which lead to large numbers of non-doms leaving the capital and new arrivals going elsewhere and not to the UK.
The non-doms have not left primarily because of Labour or Corbyn, although this may be the tip of the iceberg, along with a large number of persons who are domiciled here who will almost certainly leave if Corbyn is elected. They are not leaving because of Brexit either. The wheels were turning long before Corbyn became leader of the Opposition or the Brexit vote was announced.
The truth is that non-doms pay an enormous amount of tax. They tend to send their children to private schools and use private medicine. This is criticised but it is a benefit to the taxpayer as they don’t use up valuable resources paid for by their taxes and they leave it open to others. They pay for the NHS and for state education but seldom use them themselves.
The madness of the changes to the non-dom rules must be reversed sooner rather than later. Even when they are, it will no doubt take a long time to regain confidence in the openness of the UK again. At a time when there is so much uncertainty in the world; look at Hong Kong, and the Middle East as prime examples. We should be attracting the much-needed entrepreneurial capital that is fleeing those areas. We need it more than ever if we are to get through the next few years - whether the UK leaves the EU or not.
The UK is a unique country, a unique environment for business, and much respected throughout the world. Since it tightened its rules on non-doms the likes of Portugal, Spain, Cyprus, and Malta have all moved quickly into this market and successfully attracted billions which left here and were diverted by new arrivals choosing an alternative destination.
Don’t let it be the case that yet another clever British invention is sacrificed by a lack of care. Positivity is good: look at the enormous benefit provided by non-doms. Let us not squander the opportunity; look at the numbers and not the political spin and fabrication. The last few years have clearly demonstrated, as far as the politicians go, who's interests comes first. The BBC reported that the £9.5 billion non-doms paid to the taxman in 2016/17 fell to £7.5 billion last year. Who is the real loser here? I will let you decide. So if Mr Johnson continues, or Mr Corbyn or a coalition arrive the fiscal coffers are now minus £2 billion at a time when austerity is causing such hardship. Who in their right minds would throw this amount away when A&E queues are at an alltime high, headmistresses are cleaning school lavatories, police numbers have been reduced, police stations have been closed, and teenagers are being knifed and killed on our streets?
Look at the numbers not the politicians’ agenda and decide what you want.
As published on eprivateclient.
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