Labour’s Non-Dom Policy: A Boon for Monaco & Jersey?

“Let’s all move to Monaco or Jersey…”

….so say literally 90% of the clients we speak to – if the new Labour government pushes through with plans to abolish the non-dom tax status entirely.

Labour say that the current measures are too lenient and leave room for loopholes, and that their new policies will raise an additional £3.2 billion annually.

The manifesto specifies that non-doms will no longer benefit from the remittance basis, which allows them to avoid UK taxes on foreign income. And quite critically, they also plan to bring offshore trusts within the scope of inheritance tax, regardless of when the trusts were established.

But this £3.2 billion is somewhat of a smokescreen.

It’s a figure that won’t be achieved for one simple reason – those wealthy individuals will just leave the UK, significantly reducing the overall tax revenue. And when they do, it will have a huge knock on effect. Not only to the property market, but to industry, education, hospitality, and many more.

And let’s not forget that the additional revenue from these tax changes – to fund public services like the NHS and education – is central to Labour’s policy platform.

Last year, a non-dom paid £665m income tax and on average, non-doms pay 10 times as much as the average tax bill, approx £170k. It beggars belief why any government would want to disincentivise this kind of revenue topping up their depleted coffers. You can buy a lot of ambulances with £665m! 

We’ve heard from a private banker whose firm had 9,000 calls from clients thinking about moving abroad after hearing the news. A staggering number.

The Institute of Fiscal Studies have emphasised the need for more detailed plans to ensure these measures don’t negatively impact the UK’s attractiveness for investment.

Financial advisers that we’ve spoken to are worried about the transitional provisions and the impact on existing non-doms. Without knowing the full details of Labours plans, there is genuine fear that people will rush into making decisions around their location and finances – hoping to mitigate the impact of the proposed changes.

Our friend Tim Searle TEP – a leading tax and insurance advisor based in Dubai – has these words of advice for anyone looking to jump quickly:

“It’s important for non-dom investors to understand their position now and what it is likely to be post election with little time left before April ‘25 if any significant protection or restructuring is to be implemented. It is evident that this is a serious fiscal cat among the pigeons and advisory are likely to be swamped if it is left to the last minute. Clients need to engage their tax advisory, realtor, lawyer, fiduciary and insurance specialists to secure a clear way forward.”