Rich foreigners 'shunning Britain over Labor Party's £2bn raid on non-residents'

Shadow business secretary Jonathan Reynolds has suggested Labor plans to “modernize” the tax status of non-residents. Photo: Stefan Rousseau/PA

Labour's plans to launch a £2 billion tax raid on non-residents are already deterring wealthy foreigners from coming to the UK, international lawyers warn.

Tax lawyers working with billionaires and multi-millionaires have already seen a «significant» drop in interest from overseas clients in coming to the UK, Withers said.

Labour has long warned it plans to change the scheme allowing foreigners to live in UK without paying tax on foreign income up to 15 years.

The party, which is 20 points ahead in the polls, initially said it would abolish the tax status of homeowners. However, earlier this week shadow business secretary Jonathan Reynolds suggested Labor would instead «modernise» it and make it less generous.

Keri Vokes, a private client and tax partner at Withers, said: «I probably have , there are 60-70% fewer clients looking to move to the UK than usual at this time of year. This is a significant reduction in the number of people coming to the UK.»

Customers who were considering coming to the UK are now turning their attention to destinations such as Jersey, Guernsey and the Isle of Man. According to her, the main contenders are also Switzerland, Italy and Dubai.

Italy has a simpler system than the UK, where wealthy foreign nationals can pay a flat fee of €100,000 (£86,000) per year for their foreign source income.< /p>

Ms Vokes said concerns about changes to the scheme were a “daily conversation” with clients.

She said: “We can't say much about what the new regime might look like. like. But it's the biggest concern for customers when they're looking for a place to live and considering whether to stay or leave the UK.”

In 2022, around 68,800 taxpayers were classified as non-resident. , according to HM Revenue and Customs.

Many of those benefiting from the tax status work in financial services and private equity, according to Ms Vokes.

Labour is also considering raising taxes on profits private equity managers make from successful deals from 28% to 45%.

Ms Vokes said: “I have a lot of clients in the private equity industry who are planning to leave the UK. Italy is one of the attractive jurisdictions in which they are considering settling. It's definitely a double whammy for this category.»

Labour says changes to the non-resident tax scheme will generate £2 billion for the Treasury.