UK prime minister Keir Starmer’s planned tax crackdown on non-doms could yield no extra funds for the Treasury, according to an exclusive report in The Guardian on 25 September.
Labour planned to use the money raised from wealthy individuals who are registered overseas for tax purposes to invest in ailing public services.
But the Guardian said in the report that it “understands that Treasury officials fear estimates due to be released by the government’s spending watchdog may suggest the policy will fail to raise any money because of the impact of the super-rich non-domiciles leaving the UK”.
Reacting on LinkedIn, prominent private client lawyer James Quarmby who is partner of Stephenson Harwood, commented on ‘why this Guardian article is significant’: “It’s not the message itself (which is no surprise to the well informed) but the identity of the messenger.
“Previously, the Guardian has stuck pretty rigidly to the magic thinking adopted by the Labour Party – namely that whatever they do to non doms, they will suck it up and stay. The ludicrous Warwick report has assisted this state of mind by reassuring Labour that only 77 non doms would leave the U.K. I note Arun Advani is at it again, defending his report, as quoted later in the article. However, that’s the point – the headline conclusion of the article is quite the opposite and this may signal a slight hesitation on the part of the Labour administration as the realisation lands that, just perhaps, this might not be such a great idea after all.
“I’m not suggesting that the information was deliberately leaked to the Guardian by HM Treasury to provide political coverage for a retreat or u-turn by Reeves, but this article does signal a change in the weather and it may well preface some strategic adjustments to the non dom policy. I’m now much more confident that we will see a sensible conclusion to the issue of IHT and trusts – something the article specifically mentions as a key consideration.
“I’m sticking by my prediction of grandfathering for pre-Budget Day trusts, with some kind of additional incentive for taxpayers to remove assets from their trusts at a bargain rate of tax. We will see in 5 weeks.”
