The tax crackdown on non-doms has led to £401m of misplaced stamp duty revenues, in accordance to Knight Frank.
The non-dom regime that allowed residents to declare one other nation as their tax domicile was tightened after which abolished by earlier Conservative and present Labour governments, which notably impacts stamp duty, inheritance and capital good points taxes.
Former Tory chancellor George Osborne tightened the principles in 2017, whereas final yr Jeremy Hunt introduced he would scrap the regime from April 2025, which had been a Labour coverage.
Labour Chancellor Rachel Reeves in her October Budget introduced ahead the measures and closed a loophole permitting non-doms to keep away from inheritance tax on belongings in offshore trusts.
“Those that make the UK their dwelling ought to pay their taxes right here,” Reeves stated on the time.
She then introduced small changes to the transitional preparations to the brand new regime on the Davos summit in January, after a marketing campaign from foyer teams that signify rich people.
However, the Treasury stated it nonetheless anticipated its vary of taxes that apply to non-doms to increase £33.8bn over 5 years.
Knight Frank head of UK residential analysis Tom Bill says: “New rules include a four-year time restrict and imply nations like Italy, which has an annual flat tax that ringfences abroad belongings, have turn out to be extra engaging.”
However, Reeves is now reportedly contemplating modifying adjustments that got here into drive in April that make the worldwide belongings of all UK residents topic to inheritance tax at 40%, even when these are positioned in trusts, in accordance to a report within the Financial Times final week.
These strikes have reportedly led to millionaires leaving the UK for nations with looser tax insurance policies for the rich over the past 12 months.
Last yr, some 9,500 millionaires left the UK, in accordance to provisional estimates in a report by world analytics agency New World Wealth and funding migration advisers Henley & Partners printed in January, though these figures are contested.
This compares to 16,500 millionaires who left the nation since Brexit, between 2017 and 2023, the report added, favouring such cities as Paris, Dubai, Amsterdam, Monaco, Geneva, Sydney, and Singapore.
The property agent says, “the impact of the rule change on the prime property market has been predictable”.
The variety of £5 million-plus gross sales in London within the yr to May was 14% decrease than the earlier 12-month interval, in accordance to knowledge from Knight Frank and LonRes.
Bill provides: “Based on how far the variety of £5 million-plus exchanges fell beneath what would ordinarily be anticipated between March 2024 and May this yr, we calculated that £401m was misplaced in stamp duty income at this higher finish of the market.”
Knight Frank says its stamp duty determine relies on how the capital’s prime property market had carried out over the earlier two years.
It provides that’s assumed all transactions have been topic to the further charge of stamp duty, and half incurred the two% non-resident surcharge.
Total stamp duty receipts got here in at £11.6bn within the 2023/24 monetary yr.
The agent provides that £401m represents 4% of £9.9bn, which is the newest OBR estimate of how a lot fiscal headroom the Chancellor has for her spending plans.
“As the strain on the federal government funds intensifies, the relative measurement of such black holes will solely develop,” Bill provides.
