From the FT, two days ago:
The preferential tax treatment of “non-dom” individuals – people who are not UK domiciled, usually because they were not born in Britain – remains controversial but is a big part of the UK’s attraction to foreign investors.
The Treasury has recently pared back some of the advantages, notably by raising the annual charge from £30,000 to £50,000 in the 2012-13 tax year, for those living in Britain for at least 12 years. But advisers said the UK’s appeal had not been significantly dented. The increased tax charge will only apply to about 3,500 non-doms, according to Treasury estimates.
Jenny Tozer, chair of the investment committee at Vestra Wealth, a wealth management group, said UK taxes on foreign residents were still fairly light relative to other jurisdictions. She said: “During the financial crisis France, Italy and Spain ramped up taxes on foreigners who own property, which has only increased the appeal of the UK.”
Property taxes in the UK are very low by international standards. The maximum rates payable even on luxury mansions in central London are generally below £3,000 per year.
Ms Tozer said most of her clients saw the non-dom levy as a “rent” for the privilege of being in the UK but, “given the other advantages of residence, a price generally worth paying”.
The HICE in today's City AM:
BRITAIN has become dangerously reliant on a small-number of highly paid and wealthy individuals for its tax receipts. If these people decide to leave the UK, or for some reason suddenly earn or spend less money, the public finances would suffer disproportionately. That is one of the conclusions I draw from a fascinating report published yesterday by the Institute for Fiscal Studies (IFS).
The income tax alone paid by the 300,000 or so highest income individuals accounts for 7.5 per cent of all tax revenues. These people also pay large amounts of Vat and capital taxes. In 2012–13, 30 per cent of revenues from stamp duty on residential properties was derived from just 1 per cent of transactions: those on homes worth over £1m.
The same year, the IFS reminds us, transactions in Westminster and Kensington & Chelsea alone accounted for more than 14 per cent of all cash raised by HMRC from stamp duty on residential property for the whole of the UK. Just ten local authorities (nine of them in London and one in Surrey) brought in 29 per cent of residential stamp duty revenues; London accounted for 41 per cent of the total, up from 27 per cent in 1997–98.
Wealthy people are quite happy to pay "rent" to the government in exchange for relatively light taxation of income; people are prepared to pay ridiculous amounts of money to own land and buildings in London and the South East (and a few places on the south coast); and the HICE worries what would happen to tax revenues if "these people decide to leave the UK".
Let's join those dots: how about we reduce taxes on income and private/personal wealth and increase taxes on the value of the one thing which they can't take abroad with them and which they are prepared to pay ridiculous sums to own? From their point of view, as long as the "rent" they are paying here is less than the income/wealth tax they can save by living here rather than anywhere else, they'll be happy to pay it.
Thursday, 6 February 2014
From the FT, two days ago:
My latest blogpost: "If only they could join the dots…" (2)Tweet this! Posted by Mark Wadsworth at 09:05