By Sinead Cruise

LONDON (Reuters) – For ultra-rich businessman Bassim Haidar, living in London has become an expensive indulgence he can no longer justify.

While Britain’s new prime minister Keir Starmer settles into No. 10 Downing St, Haidar is looking for homes in Greece and Monaco because a proposed overhaul of inheritance tax will make Britain a “no-go” zone for the rich, he says.

Starmer says the overhaul will make Britain’s tax system fairer and raise funds for expanded public services.

While he supports some reform, Haidar says the proposed changes could hurt the economy if international business owners choose to leave Britain or avoid moving here, undermining its reputation as a hotbed for start-ups.

The recently ousted Conservative government outlined surprise plans in March to phase out Britain’s century-old tax regime, which exempts wealthy individuals from paying tax on income earned abroad.

But in the run-up to his July 4 election victory, Starmer’s left-wing Labor Party pledged to also scrap permanent relief that non-UK-born “non-residents” could get if they put non-UK assets into a trust within 15 years since their move. in Britain.

Now the dust has settled on Labour’s return to power, Haider wants Starmer and Chancellor of the Exchequer Rachel Reeves to review those plans and replace them with a new six-figure annual tax on people with a net worth of more than £5m ( 6.52 million dollars ).

Haidar estimates that a £150,000 levy could raise an extra £4 billion a year for the government, boosting state coffers without sparking an exodus of the wealthy who don’t own the house.

“The idea that the UK is just too good to leave is wrong,” the 53-year-old Nigerian-born Lebanese citizen told Reuters.

“To be taxed so heavily on wealth created outside Britain, perhaps years before people even move to the UK, is unfair,” he said, urging the government to sit down with global mobile millionaires and discuss tax reforms that he said would they might put the UK. jobs at risk.

Organizations such as Patriotic Millionaires UK are also campaigning to introduce annual wealth contributions for the super-rich.

Setting a tax of 2% on a threshold of £10m a year would affect around 20,000 people but raise up to £24bn a year, the group estimates.

TRISMA NUMBER

Investment firms, wealth managers and private bankers who provide financial services to around 70,000 non-dom UK-based individuals are on high alert for when the historic tax overhaul might begin.

The Labor government estimates it can raise an extra £5 billion a year by tackling domestic tax avoidance. Estimating how much more could be raised by changing the tax benefits to offshore trusts is more difficult.

“It is not possible to directly measure how much foreign income nonresidents using the remittance basis have and therefore what the potential tax base is,” the independent Institute for Fiscal Studies said in a report published in March.

Britain has around 37,000 non-residents who choose to be taxed on a ‘remittance basis’. This means UK tax is not charged on their foreign income or capital gains unless they are attributed to the UK.

According to the IFS, these people collectively paid around £6 billion in UK income tax, National Insurance contributions and capital gains tax in 2020–21.

Threats by the rich to leave unfriendly tax regimes are not new, and some wealth advisers say London’s status as a culturally diverse city with world-class schools will eventually persuade the well-heeled to accept.

But the desire to shield his family wealth for future generations far outweighed the inconvenience of moving to another country, Haidar said.

Britain is likely to lose almost one in six of its US dollar millionaires by 2028, according to the UBS Global Wealth Report 2024 published earlier this month.

The Swiss bank cited the UK’s high core number of ultra-rich, the fallout from the Russia-Ukraine war and the lesser impact of Britain’s decision to scrap “non-dom” tax benefits as reasons for the sharp drop.

UBS has predicted that the number of dollar millionaires in Britain will fall by 17% to around 2.5 million in 2028.

By contrast, total dollar millionaires in the United States and France were projected to grow by 16% through 2028, in Germany by 14%, in Spain by 12% and in Italy by 9%.

In its report in March, the IFS said there was “only limited evidence on how non-households would react to higher taxes”.

CALL FOR INVESTORS

Proposals to strengthen tax loopholes that benefit the wealthy come as UK financial regulators are doubling down on efforts to make Britain more attractive to global companies and investors.

Last week, Britain’s Financial Conduct Authority unveiled a revamp of company listing rules aimed at enticing owners of promising private companies to list on the London stock exchange.

However, Haidar has scrapped plans to list financial services firm Optasia in Britain and has begun talks with alternative listing venues in countries with more favorable tax regimes.

“If those who are already here now want to leave, how can you start attracting new people when the new system is going to be even more punitive?” he said.

David Lesperance, managing director of tax consultancy Lesperance & Associates, told Reuters the government should not underestimate the ease and speed with which wealthy families could leave the UK and how countries such as Dubai and Singapore are trying to attract them.

Several of his clients were considering relocation to up to 17 alternative tax jurisdictions, including Ireland, Malta and Portugal.

“Wealth doesn’t stand still anymore. It doesn’t have to. Golden geese have wings and they will fly,” he said.

($1 = 0.7669 pounds)