LONDON (Reuters) - For ultra-wealthy entrepreneur Bassim Haidar, living in London has become an expensive indulgence he can no longer justify.
While new British Prime Minister Keir Starmer settles into No. 10 Downing St, Haidar is searching for homes in Greece and Monaco, because a proposed inheritance tax revamp will make Britain a ‘no go’ zone for the rich, he says.
Starmer says the overhaul will make Britain’s tax system fairer and raise funds for stretched public services.
While supportive of some reform, Haidar says the proposed changes could harm the economy if international business owners choose to quit Britain, or avoid moving here, undermining its reputation as an incubator for fledgling firms.
The recently ousted Conservative government outlined surprise plans in March to phase out Britain’s centuries-old ‘non dom’ tax regime, which spares wealthy individuals from paying tax on income earned overseas.
But in the run-up to its July 4 election win, Starmer’s left-leaning Labour party pledged, opens new tab to also scrap permanent reliefs ‘non doms’ born outside the UK could obtain if they put non-UK assets into a trust within 15 years of moving to Britain.
Now the dust has settled on Labour’s return to power, Haidar wants Starmer and finance minister Rachel Reeves to rethink these plans, and to replace them with a new six-figure annual tax on people with net worth in excess of 5 million pounds ($6.52 million).
Haidar estimates a 150,000 pound levy could raise an additional 4 billion pounds a year for the government, boosting state coffers without triggering an exodus of the non-dom wealthy.
“The notion that the UK is simply too good to leave is incorrect,” the 53-year old Nigerian-born, Lebanese citizen told Reuters.
“To be taxed so heavily on wealth generated outside Britain, perhaps years before people even moved to the UK, is unfair,” he said, urging the government to sit down with globally-mobile millionaires and discuss tax reforms that he said may put UK jobs at risk.
Organizations like Patriotic Millionaires UK are also campaigning to introduce annual wealth levies on the super-rich.
Setting a 2% tax at a threshold of 10 million pounds a year would impact around 20,000 people, but raise up to 24 billion pounds a year, opens new tab, the group estimates.
Investment firms, wealth managers and private bankers who provide financial services to around 70,000 UK-based individuals with ‘non-dom’ status are on high alert for when the historic tax overhaul might begin.
The Labour government reckons it can raise an extra 5 billion pounds a year by tackling domestic tax avoidance. Assessing how much more could be raised by changing tax perks on offshore trusts is more difficult.
Several of his clients were considering relocation to as many as 17 alternative tax jurisdictions, including Ireland, Malta and Portugal.