Domicile: Pragmatic question 2: Will we lose investment?

Posted on

It's claimed if non-doms don't live here they won't invest here. And that means that if they leave that their investments will too.

This is true, in part. If the non-doms don't live here they won't buy houses here and so drag up property prices. We should all, on that basis, be pleading for them to go. When people doing valuable jobs in our community have to live with their parents into their 30's because there is no chance of them buying a property of their own we have a seriously screwed up economy. Non-doms have contributed heavily to the creation of that situation.

But that's only one part of the non-doms investment they might make here: the rest is in business. Now let's assume that non-doms are rational people who accords with the principles of the economic man or women who underpins all models that say that the market economy works best for our well being. If they do then they will, when investing in the UK, do so entirely on the basis of the return available on their investment. And let's be clear, any business located in the UK is taxed in the UK, whether owned by a domiciled person or a non-dom and whether run through a limited company or not. So at this level the presence of the non-dom in the country makes not one iota of difference at all to the investment decision when it comes to the taxation of returns. So can we stop the debate on this point please? It is meaningless.

There is a difference though: it is on capital gains when the business is sold. Right now the non-dom need not pay capital gains tax on this gain if the asset is registered as held offshore and they do not remit that gain back to the UK. So at the moment of sale the non-dom gets an advantage. But let's be clear what the advantage is: it's an advantage when it comes to getting out of Britain, and not when it comes to investing in Britain. So can we again stop the complete nonsense written to the contrary on this point?

Finally, can we ask a simple question? Why do we want to give those not resident in this country a taxation advantage over those who are resident in this country when it comes to selling UK businesses? And why anyway do we want to make it so easy for those with transient interest in the UK to quit it? I'm completely baffled about this as a basis for any sane economic policy designed to encourage investment. This policy seems all about disinvestment.

Can you enlighten me Digby Jones?