Labour’s non-dom threats mean UK set to miss out on ultra-rich fleeing France and US
A leading wealth advisor has warned the Labour Party’s non-dom policy means London will miss out on welcoming the many ultra-wealthy individuals looking to leave France and the US due to political instability.
The party on the precipice of power is proposing to tighten up the ‘loopholes’ in the Conservatives’ decision to abolish the non-dom status, a more than 200-year-old scheme that allows rich foreigners to lay down roots in Britain without having to pay tax on their overseas income and assets.
‘London’s off the cards’
David Lesperance, whose firm Lesperance & Associates provides immigration and tax advice to ultra-rich families and individuals, told Morning Wire that the UK would have been a priority destination for elites fleeing political turmoil in France and the US, but Labour’s plans mean it’s no longer on their radar.
“London’s off the cards. They’re not going jump out of the French tax pot and into the UK fire. If they don’t need space then they have Monaco… and then we’ve got the UAE, Switzerland and Italy,” Lesperance said of the febrile political situation in France.
“Before 2016 London would have absolutely been the natural destination of choice, but [that has gradually changed], and now with the incoming Labour government they’ll almost certainly go elsewhere.”
However, other countries are also trying to clamp down on non-doms, complicating the picture for those trying to flee higher taxes.
In France, Marine Le Pen’s Rassemblement National party, which is proposing a wealth tax on the country’s most moneyed citizens, is set to face off in the parliamentary elections against a coalition that encompasses Macron’s En Marche and far left parties, which have proposed a 90 per cent marginal tax rate.
Lesperance has also found some of his American clients are preparing an exit plan for if Donald Trump were elected.
He said: “As the Wall Street Journal said, there’s going to be a ‘tax armageddon this year’ no matter what happens in the election. And after the Supreme Court’s decision on presidential immunity and on the heels of Biden’s poor performance in the recent debate, I’ve now got clients who are like “Oh my God, I don’t want to live in a MAGA America.”
But, again, many are looking elsewhere rather than eyeing up the UK. “[The UK] would have been their natural port of all… But if I’m an UHNW international family with homes in two or three places. I ain’t coming to the UK,” Lesperance said.
Britain’s non-doms plotting their exit
Labour’s non-dom policy, which will make wealthy foreigners based in the UK pay inheritance tax on all their international assets, is also deterring the rich from coming to the UK and forcing some current non-doms to devise their own exit plans.
“I just worked with a fund manager who’s going to move to Italy,” Lesperance told Morning Wire “It’s a one-hour time difference. He just needs to stay up another hour later to watch the London markets close… but he’ll pay just £100,000 a year flat and there’s no accounting or compliance costs.”
Labour has claimed its policy will bring in £5.1bn a year by the end of the parliament.
But Lesperance said the exchequer was set to miss out on income elsewhere: “Non-doms contribute £170,000 annually, and that’s just the average…
“You’re going to lose the current year’s income tax revenue and, whether you think it’s fair or not, the top one per cent are super contributors, and of that one per cent the non-doms are super super contributors.
“Rachel Reeves is going to open up the non-dom cookie jar and realise there were fewer cookies than she thought.”
The Labour Party was contacted for comment.