I was interviewed (again) on non-doms yesterday. Some of the questions and answers were as follows:
Will the non-doms leave?
Yes, of course they will. They all have to leave at some point. If they do not they are not non-dom. The real question is how many will leave now.
Maybe 20,000 are really hit by this change in rule. Of those STEP says 5% will leave. That's 1,000 people.
Will this have serious effect on London as a finance centre?
If 1,000 people will seriously alter London's status then we have much more to worry about than the non-dom rule.
The reality is that this change will have no noticeable impact at all.
Will this change stop non-doms investing in London?
Some tax driven hot money will leave money. That's OK. No one should want that here anyway. It destabilises our economy.
If we're talking about real investment in real business, the domicile rule gives a strong distinctive for non-doms to invest in the UK as this makes their return taxable whereas that from elsewhere is not.
So, to be candid this argument that cash will leave only affects those selling fly by night funds. The real economy will be boosted by this change.
Will London cease to be the premier finance centre?
Of course not. It takes 350,000 people to make London tick financially. They aren't going anywhere else, and they're what makes London the centre it is.
Will house prices in Chelsea fall?
I hope so. Real people doing real jobs are being priced out of living in London.
Has the government mishandled the rule change?
You mean, is six months long enough for those fiddling their tax to reorganise their affairs? I think it has been extraordinarily generous in the notice it has given.
Is the rule change the right one?
No, of course not. First of all, the domicile rule is illegal so it should be abolished. Second, it costs at least £4.3 billion, which is cash we need. Third, the change leaves the injustice of the system favouring only the rich and just adds to the group who feel prejudiced as a result. Fourth the change complicates rather than simplifies UK law. Sixth it leaves two tax systems in operation. The list of problems the change has created is endless. They could all be solved by abolition.
Why all the fuss then?
The bankers, lawyers, accountants and estate agents who have exploited this rule for their benefit don't want to lose a profit opportunity. That's the be all and end all of it. Why should we give in to those who want to make many out of fiddling the state what is due to it whilst promoting serious and illegal inequality?
What will happen if the proposed rules come in?
I'm sure they will come in. Darling can hardly back down now. And when they do they'll be unworkable. In three years the rule will be abolished altogether.
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I have spend the last few days scouring the Internet trying to find out what the situation is “for non doms ” with assets in countries with exchange control. Reason being that I am from South Africa where you are quite limited in what you can take out of the country and what you can do with the money if you get permission. South Africans have benefited from an explosion in property values far greater than what hapened in the UK and the rent incame from a small flat will exceed the £2000 limit.
Estimates of number South Africans in the UK range from 500k to 2 million (unreliable due to the fact that many have British/dual citizenship.) They make up significant numbers of the Uk’s teachers, nurses academics etc. A count of the people I know (not that I go looking for them) has a breadwinner working somewhere in education in 8 out of 11 families. Safe in their “non dom” status no one has ever had to claim it through self assessment because they do not have other earnings in the UK.