The softening of tax rules for non-doms announced by UK Chancellor Rachel Reeves at Davos has been hailed as a U-turn after thousands decided to quit the UK, but for others the move does not go far enough to make staying worthwhile.
People who are non-domiciled in Britain for tax purposes live in the country, but do not pay tax on income from activities carried out outside the UK. The government will scrap the non-dom status in April and replace it with a residence-based regime, which brings wealth held abroad into the UK inheritance tax system.
The move, announced by Ms Reeves in her budget speech last October, increased the flow of high net worth individuals leaving the UK. A report by global analytics firm New World Wealth and investment migration advisers Henley and Partners found more than 10,000 millionaires left the UK last year, an increase of 157 per cent on 2023. In addition, analysis by the Adam Smith Institute showed that, had the millionaires stayed, they would have paid an average of £393,957 in income tax, meaning their departure is equivalent to the loss of half a million average taxpayers.
But on Wednesday, Ms Reeves told a World Economic Forum session in Davos that she had been "listening to the concerns that have been raised by the non-dom community".
"And in the finance bill, we will be tabling an amendment which makes more generous the temporary repatriation facility, which enables non-doms to bring money into the UK without paying significant taxes," she added.
Double tax
Ms Reeves also sought to allay fears that the changes to the non-dom tax regime would have a bearing on the double-taxation treaties the UK has with various countries, including the UAE. "That's not the case," she said. "We're not going to be changing those double taxation conventions." Double taxation treaties ensure that individuals and companies are not unfairly taxed twice on earnings. The UK signed a double taxation treaty with the UAE in 2016.
The temporary repatriation facility (TRF) is aimed at luring current non-doms to bring money the UK. It is available for just three tax years, from the tax year starting in April. The facility's tax rate will be 12 per cent for the first two years and 15 per cent in the final tax year of operation. It is thought that Ms Reeves might announce some lowering of these rates in the Finance Bill, but the government said the move does not "change the overall approach" to the policy.
But Andrew Marr, managing partner at Forbes Dawson, thinks Ms Reeves may be considering another strategy. "I have a sneaking suspicion that she got her policies a bit mixed up and may actually be intending to extend the three-year tail for a period past 2025/2026," he told The National. "This will allow [the non-doms] to wait and see how things go rather than being rushed to the exit door. If her comments are to make any tangible difference, then she needs to get cracking and produce some unambiguous new policy that people can consider."
'Damage is already done'
As such, many tax advisers have been unmoved by Ms Reeves's comments in Davos. "Whilst the TRF was a very welcome rule, it does not impact the tax position in respect of future income/gains or inheritance tax," Alexandra Britton‑Davis, partner at the tax experts Saffery, told The National. "I therefore don’t expect this to change the plans of anyone who has left/plans to leave."
Helen Clarke, a partner at Irwin Mitchell, said that while it was "good to see that the government is listening to the concerns of the non-dom community", Ms Reeves's tweak is "not enough".
"The primary reason for the exodus of wealthy individuals is the 10-year tail and the inheritance tax implications for non-dom taxpayers. While the increased temporary repatriation facility is a step in the right direction, more comprehensive measures are needed to address the root causes of this issue,” she added.
Robert Brodrick, chairman of the private client business at Payne Hicks Beach, said he will not be changing the advice to his clients in the light of Ms Reeves's comments. "The UK is no longer the attractive place for internationally wealthy individuals that it once was. And post-Brexit, and in the absence of an investor visa, it is increasingly difficult for wealthy international individuals to move to the UK," he told The National.
The UK Treasury said the changes to the non-dom tax regime will raise £33.8 billion of tax revenue, but shadow chancellor Mel Stride said the softening of the non-dom tax changes proved Ms Reeves's budget was "falling apart in front of our eyes" and that the Chancellor is "deeply out of her depth".
"At the election Labour said their plans would raise money. Now they have been forced to admit their plans make the UK less attractive," he added. "But the damage is already done. Tax revenue equivalent to hundreds of thousands of taxpayers has already been lost."
Cultural fiesta
What: The Al Burda Festival
When: November 14 (from 10am)
Where: Warehouse421, Abu Dhabi
The Al Burda Festival is a celebration of Islamic art and culture, featuring talks, performances and exhibitions. Organised by the Ministry of Culture and Knowledge Development, this one-day event opens with a session on the future of Islamic art. With this in mind, it is followed by a number of workshops and “masterclass” sessions in everything from calligraphy and typography to geometry and the origins of Islamic design. There will also be discussions on subjects including ‘Who is the Audience for Islamic Art?’ and ‘New Markets for Islamic Design.’ A live performance from Kuwaiti guitarist Yousif Yaseen should be one of the highlights of the day.
Profile Idealz
Company: Idealz
Founded: January 2018
Based: Dubai
Sector: E-commerce
Size: (employees): 22
Investors: Co-founders and Venture Partners (9 per cent)
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Company%20profile
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Company profile
Company name: Suraasa
Started: 2018
Founders: Rishabh Khanna, Ankit Khanna and Sahil Makker
Based: India, UAE and the UK
Industry: EdTech
Initial investment: More than $200,000 in seed funding
COMPANY%20PROFILE
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Draw:
Group A: Egypt, DR Congo, Uganda, Zimbabwe
Group B: Nigeria, Guinea, Madagascar, Burundi
Group C: Senegal, Algeria, Kenya, Tanzania
Group D: Morocco, Ivory Coast, South Africa, Namibia
Group E: Tunisia, Mali, Mauritania, Angola
Group F: Cameroon, Ghana, Benin, Guinea-Bissau
WTL%20SCHEDULE
%3Cp%3EDECEMBER%2019%20(6pm)%0D%3Cbr%3EKites%20v%20Eagles%0D%3Cbr%3EAliassime%20v%20Kyrgios%0D%3Cbr%3ESwiatek%20v%20Garcia%0D%3Cbr%3EEntertainment%3A%20Tiesto%3C%2Fp%3E%0A%3Cp%3EDECEMBER%2020%20(6pm)%0D%3Cbr%3EFalcons%20v%20Hawks%0D%3Cbr%3EDjokovic%20v%20Zverev%0D%3Cbr%3ESabalenka%20v%20Rybakina%0D%3Cbr%3EEntertainment%3A%20Wizkid%0D%3Cbr%3E%0D%3Cbr%3EDECEMBER%2021%20(6pm)%0D%3Cbr%3EFalcons%20v%20Eagles%0D%3Cbr%3EDjokovic%20v%20Kyrgios%0D%3Cbr%3EBadosa%20v%20Garcia%0D%3Cbr%3EEntertainment%3A%20Ne-Yo%0D%3Cbr%3E%0D%3Cbr%3EDECEMBER%2022%20(6pm)%0D%3Cbr%3EHawks%20v%20Kites%0D%3Cbr%3EThiem%20v%20Aliassime%0D%3Cbr%3EKontaveit%20v%20Swiatek%0D%3Cbr%3EEntertainment%3A%20deadmau5%0D%3Cbr%3E%0D%3Cbr%3EDECEMBER%2023%20(2pm)%0D%3Cbr%3EEagles%20v%20Hawks%0D%3Cbr%3EKyrgios%20v%20Zverev%0D%3Cbr%3EGarcia%20v%20Rybakina%0D%3Cbr%3EEntertainment%3A%20Mohammed%20Ramadan%0D%3Cbr%3E%0D%3Cbr%3EDECEMBER%2023%20(6pm)%0D%3Cbr%3EFalcons%20v%20Kites%0D%3Cbr%3EDjokovic%20v%20Aliassime%0D%3Cbr%3ESabalenka%20v%20Swiatek%0D%3Cbr%3EEntertainment%3A%20Mohammed%20Ramadan%0D%3Cbr%3E%0D%3Cbr%3EDECEMBER%2024%20(6pm)%0D%3Cbr%3EFinals%0D%3Cbr%3EEntertainment%3A%20Armin%20Van%20Buuren%0D%3Cbr%3E%0D%3C%2Fp%3E%0A
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Profile of Bitex UAE
Date of launch: November 2018
Founder: Monark Modi
Based: Business Bay, Dubai
Sector: Financial services
Size: Eight employees
Investors: Self-funded to date with $1m of personal savings
More from Rashmee Roshan Lall
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
DUBAI%20BLING%3A%20EPISODE%201
%3Cp%3E%3Cstrong%3ECreator%3A%20%3C%2Fstrong%3ENetflix%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EKris%20Fade%2C%20Ebraheem%20Al%20Samadi%2C%20Zeina%20Khoury%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%202%2F5%3C%2Fp%3E%0A
Auron Mein Kahan Dum Tha
Starring: Ajay Devgn, Tabu, Shantanu Maheshwari, Jimmy Shergill, Saiee Manjrekar
Director: Neeraj Pandey
Rating: 2.5/5