Labour’s plan to abolish non-dom status has been described as “using a sledgehammer to crack a nut”, that would result in serious problems for high net-worth individuals who did not have specialist advice.
Piers Masters, a partner at City law firm Charles Russell Speechlys, said the ultra-wealthy would need specialist advice to help mitigate potentially punitive tax measures proposed by the Labour leader.
Mr Masters said: “The great majority of those with non-dom status are legitimately foreign-born individuals with global interests but who want to make their home temporarily in – and invest in – the UK.
“This has benefited our country hugely as people from all over the world have come here to work, buy property, spend money with our business and, yes, pay their taxes.”
He also warned that those who currently pay the levy may not choose to stay in the UK and pay more tax in the future.
Non-dom status allows those who live in Britain to name another country as their domicile, and they are required to pay tax on overseas earnings only if they remit that money to Britain.
It was introduced by William Pitt the Younger in 1799 for British nationals working across the Empire.
However, Labour leader Ed Miliband said the tax rule effectively made Britain a “tax haven for a few”.
“These are people who live here, work here, are permanently settled here, and were even brought up here, but just aren’t required to pay taxes,” he added.
Under the proposals, no new people would be able to claim non-dom status after April 2016, while existing non-doms would have a short period in which to adjust their tax affairs.
Adviser view
Nigel Green, chief executive of international advisory firm deVere Group, said: “Such a move, which it can be reasonably assumed is an ill-conceived attempt to woo voters, would unquestionably trigger an exodus of some of the country’s wealthiest taxpayers.
“Making the UK a less attractive destination for the world’s richest individuals does not bode well for the long-term future of Britain’s economy.
“In an increasingly globalised world, the UK must be competitive.”
