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i was at Royal Ascot earlier this week
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losing money in the sunshine and as I
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watched the horses thunder down the
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straight it occurred to me believe it or
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not that Rachel Reeves is trying to
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close the stable doors after the
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thoroughbreds have bolted i refer to the
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nondoms the mega rich taxpayers who have
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packed up and left well many of them
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have leaving the chancellor scrambling
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to water down her nondom tax changes too
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little too late and more to the point
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what about the rest of us welcome to the
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week in business with me Christian May
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do you care if the global mega rich
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choose Milan over London does it matter
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is it good riddance the fact is most of
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us will go our whole lives without ever
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encountering one of these near mythical
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non-doms maybe I saw a few atcot the
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ultra wealthy individuals who until
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recently benefited from very special tax
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rules that protected their overseas
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income from the clutches of the UK
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Treasury now by definition they move in
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different circles they live on different
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streets they lead different lives from
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the rest of us but as a nation there's
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one way in particular where their
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contribution has been felt and that's in
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the taxes that they do pay or have paid
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here in the UK before the government
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clamped down on the rules ending an
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arrangement that had worked for decades
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there were at least around 70,000 people
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claiming non-dom or nonUK doiciled
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status and they paid an average of about
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£120,000 a year in direct UK taxes some
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paid less than that granted but others
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paid more a lot more some paying
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millions of pounds on their UK activity
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while their foreign wealth was treated
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as just that foreign not our business
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now the last government started to
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fiddle with the rules and the Labor
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government went even further announcing
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that the entire non-dom status will be
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abolished and that foreign wealth will
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fall under UK inheritance tax rules in
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April worldwide assets of all those
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enjoying UK residency became liable for
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inheritance tax at 40% unsurprisingly
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indeed entirely predictably a lot of
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non-dom simply said "Nope not having
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that." And they left the UK for more
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favorable regimes countries such as
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Italy have welcomed them with open arms
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learning from the success perhaps of our
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original scheme and now it seems that
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faced with the reality that the nondom
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reforms won't raise anything like the
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amount claimed and could in fact be a
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net loss to the Treasury Rachel Reeves
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is said to be reviewing the inheritance
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tax rules in a bid to ensure that the UK
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remains attractive and competitive now
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the government wants foreign investment
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it needs it and it seems the chancellor
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has finally woken up to the fact that
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people including the mega rich in fact
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particularly the mega rich are sensitive
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to punitive tax rates the thing is the
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damage has been done the UK is still
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attractive for lots of reasons but it is
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no longer seen as a welcoming and
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logical jurisdiction for the globally
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mobile ultra wealthy a panicked U-turn
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from the Treasury might stem some losses
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but it won't repair the damage caused by
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the government's illogical and
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ideological tax hikes but here's the
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thing if Rachel Reeves has looked at the
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numbers and conceded that she might have
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gone too far and that is what the
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numbers show why reserve a policy
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correction for the mega rich what about
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the rest of the country what about the
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rest of us well the imposition of VAT on
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private school fees for example has
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backfired schools have closed and
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thousands of pupils have moved into the
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crowded state sector many thousands more
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than the government said would be the
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case the policy will not raise the money
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that ministers claimed and the state
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sector will pay the price like the
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nondom crackdown it was an ideological
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decision something that served Labor
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well on the campaign trail but now in
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the real world is backfiring they should
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apologize and scrap it the hike in
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national insurance contributions for
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employers is chilling the jobs market
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making it impossible for many businesses
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to hire the government should apologize
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and scrap it that tax hike on jobs has
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also led directly to a disastrous crunch
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in business investment with the CBI
3:55
saying this week that it's seen
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businesses investment plan slump to the
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worst level in 5 years leading the
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business group to slash its forecasts
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for UK economic growth that is what
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happens when you increase taxes on jobs
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the government should apologize and
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scrap it the cruel decision to extend
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inheritance tax to farms and family
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businesses will have is having a
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terrible effect on the finances and
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future plans for people all across the
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country the government should apologize
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and scrap it you take my point and of
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course I don't expect the government to
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U-turn on any of these headline tax
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changes indeed as you know I fully
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expect them to raise taxes yet again in
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the autumn budget as we enter a doom
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loop where tax hikes cause low growth so
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the government hikes taxes to fill the
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hole a tweak to the nondom rules is
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sensible it's necessary but it's not
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sufficient the damage caused by the
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government's 40 billion pound tax raise
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on UK employers businesses farmers and
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founders is having an entirely
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predictable effect the chancellor may
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have woken up to the damage caused by a
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small part of that agenda but I'm afraid
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she's still asleep at the wheel when it
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comes to the rest of us that's it from
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me this week stay up to date and in the
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know with the city app and on city.com
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and I'll see you next week
