Exodus of the wealth creators

Alarm over non-doms already quitting Britain after Hunt’s raid on tax breaks

CHANCELLOR Jeremy Hunt is facing a backlash over his crackdown on non-doms amid fears it will cause a mass exodus of wealth creators.

MPs and businessmen have warned the changes are unlikely to generate the billions promised for the nation’s coffers and will instead drive the super-rich to Switzerland, Dubai and Singapore.

Hotelier Sir Rocco Forte said: ‘I know people who are already packing their bags. The exodus is taking place as we speak.’ The 200-year-old system allows people with their permanent home overseas to avoid paying UK tax on foreign income for up to 15 years. But on Wednesday Mr Hunt changed the rules, meaning from 2025 new arrivals will benefit from this tax break for just four years before they must pay the same taxes as UK residents. The measures were originally Labour policy and comes as the Tories try to win back the support of the business community ahead of the general election.

The policy is expected to raise £3billion in taxes annually, but economists believe the Treasury will receive nothing like that.

Conservative MP Sir John Redwood said: ‘I do not believe the OBR [Office for Budget Responsibility] figures for the extra taxation they will raise, and there will be a loss of revenue as a result.’

Tory grandee Sir Iain Duncan Smith said the money raised would ‘not last long’, as non-doms are ‘mobile people’ who can move to the country offering the best deal.

He added: ‘What you get by taxing them is relatively small, and it won’t last because they will have gone – so it will be a short term injection.

‘But what you lose is their embracing of the UK and investment, and that investment is more needed than ever as we try to come out of recession.’ The Office for Budget Responsibility, the spending watchdog, has cautioned that 10 to 20 per cent of non-doms would leave the UK because of the tax raid, but in reality the figure could be higher.

Accountant PwC and some of the country’s biggest law firms said they have been inundated with calls about the policy and what it means. Edward Hayes, of law firm Burges Salmon, said: ‘There is dismay from some clients who feel they came to the UK in good faith and the rules are being changed mid-game.’

James Ward, of law firm Kingsley Napley, added: ‘Private schools may be taxed under Labour, business flights are being taxed more. Everything that was making the UK attractive to the wealthy is being dismantled.’

Sir Rocco also warned the move would deter future non-doms considering making the move to the UK. He said: ‘Nobody will come here for four years. By the time they have got here and settled they’ll only have two years left.’

It is not the first time non-doms have been targeted. Eight years ago, the then Conservative chancellor George Osborne tightened the regime so that the status would be taken away from those who have lived in the UK for more than 15 of the last 20 years.

At the same time, other European jurisdictions – including France, Italy and Portugal – have launched comparable non-dom or impatriation regimes to attract wealthy families, increasing competition with traditional havens such as Monaco and Switzerland.

A Treasury source defended the measures and said: ‘It’s right that those with the broadest shoulders pay a bit more to help fund a tax cut for working Brits.’

‘They came here in good faith’