Several countries, including Italy, Abu Dhabi and Cyprus, are actively seeking to attract wealthy individuals from the UK following the government’s decision to abolish non-resident tax status.
Events are being held across London to encourage the estimated 67,000 non-UK residents – UK residents whose permanent home is outside the country – to move elsewhere in the wake of Labour’s election victory and subsequent budget.
Next month, a Cypriot government agency will co-host an event on the London Stock Exchange aimed at persuading high-net-worth individuals to move. Likewise, the Abu Dhabi Investment Office recently hosted an event at the Jumeirah Hotel in London to entice wealthy Britons. Italian law firm Chiomenti sponsored a Henley & Partners event titled “Non-Dom: Should I Stay or Should I Go?” To discuss resettlement options.
Nick Candy, a British property developer who attended the event in Abu Dhabi, expressed concerns about a potential talent exodus. “We’re going to have the biggest brain drain for talent this country has ever seen,” he told Bloomberg. “They’re not rushing back.”
Financial advisers have reported a rise in the number of wealthy clients preparing to leave the UK after Labor confirmed its plans to abolish the non-residency regime, which offers significant tax benefits to expatriates. David Lesperance, an international tax consultant, noted that he is “very busy” helping non-residents who are considering moving elsewhere. Tim Stovold, a partner at accountancy firm Moore Kingston Smith, said more people were exploring options in countries such as Spain and Portugal, which offer attractive tax systems.
Currently, UK non-residents are not required to pay local tax on overseas profits for up to 15 years. The government plans to abolish this system next April, and replace it with a limited grace period.
The special tax status has been a point of contention, because it mostly benefits wealthy foreigners. Supporters say it keeps wealthy individuals in the UK contributing to the economy through their spending.
Prominent figures are already taking action. West Ham United chairman David Sullivan has blamed a crackdown on non-residents for his decision to sell his London mansion at a loss. Charlie Mullins, founder of Pimlico Plumbers, has put a £12m London penthouse up for sale to avoid a tax rise, stating that he is prepared to “have no assets in the UK at all”.
According to the London School of Economics, one in five bankers were reported to be non-resident in 2022, and four in ten individuals earning £5 million or more in 2018 were reported to have claimed non-resident status at some point.
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