Following on from party leader Ed Miliband’s announcement on Wednesday, Geoffrey Todd, partner at private wealth law firm Boodle Hatfield said the tax treatment of “non-doms” has “long been a political hot potato”.
“Leap in the dark”
Although he argued that removing the complicated non-dom tax rule would make the taxation system much simpler, he said: “There is a danger that the changes could deter overseas investors from settling and investing in the UK and ultimately decrease the tax collected from these individuals rather than raise extra funds.
“Abolishing the whole concept would be something of a leap in the dark with the economic benefits unknown.”
In his speech, Miliband said if Labour won the General Election in May it would abolish the non-dom status, meaning British residents could no longer claim exemption from paying UK tax on overseas assets, income or gains.
He suggested new rules would be put in place so that temporary residents, such as foreign workers and students, would only have to pay tax on UK earnings.
“Short-sighted”
Nigel Green, founder of independent financial advisory firm, deVere, said: “Labour’s plan to come down on non-doms is a reckless and short-sighted attempt at winning votes.
“Many of these individuals have the resources to relocate easily – and many, I suspect, will do so, should this plan come to fruition. Can Britain really afford to lose them?
“Considering how determined every country is to try and attract these high-net-worth, wealth and job creating individuals to boost their economies, this move proposed by Labour seems, frankly, absurd.”
Meanwhile, Paul Noble, tax director of Pinsent Masons, slated the portrayal of non-doms as a group who exploit loopholes to pay little or no tax. “In fact they make a significant contribution to the Exchequer,” he said.
