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Nigel Farage has set out a radical tax policy giving new or returning non-doms the chance to pay a £250,000 one-off fee to shield them from paying tax and encourage them to stay in the UK.
The Reform UK leader will claim that the proceeds will be given to the lowest paid in the country, although one tax expert warned the policy would cost the exchequer £7bn a year.
Under the plan, to be detailed on Monday, non-doms would pay a one-off entry contribution in return for a stable, indefinite remittance-style regime on offshore income, and a 20-year inheritance-tax shield.
The abolition of the non-dom regime, announced by the previous Conservative government and tightened by Labour in office, has led to several high-profile people saying they will leave the UK including steel billionaire Lakshmi Mittal.
Farage admitted on Monday that no one had exact details of how many non-doms had left the country, but said: “All the stories we get from central London is that it is becoming a very rapid exodus, and that is catastrophic for our country.”
Reform’s policy, which it has dubbed a “Robin Hood-style” move, would see HM Revenue & Customs transfer proceeds directly to the bank accounts of the lowest-earning 10 per cent of full-time workers.
The party said about 2.5mn workers earning a full-time salary of under £23,000 would be given £600 if 6,000 non-doms paid for a so-called Britannia Card at the cost of £1.5bn.
The party said its policy would create a “transparent link” between the richest and poorest in the UK, restoring a “social contract” between them.
“We will rebuild the social contract by ensuring that every wealthy individual who wishes to move here makes a tangible contribution to Britain’s lowest earners,” said Farage.
The party, which is ahead in the polls, has been increasing its appeal to working-class voters as Farage hopes to tap into former Labour supporters who are disaffected with Sir Keir Starmer.
But tax expert Dan Neidle estimated that the policy would actually amount to a tax cut on super-wealthy people that would cost the Treasury about £34bn over five years, or around £7bn a year.
He argued that take-up would also probably be very limited, because a Reform government would struggle to persuade the very wealthy that the Britannia card would really provide a life-long exemption, because of the possibility that a future government would reverse the policy.
Farage said the policy was an attempt to stem an exodus of wealthy individuals who had left the country after the Labour government introduced new restrictions on non-doms.
The Financial Times revealed this month that chancellor Rachel Reeves is exploring reversing her decision to charge UK inheritance tax on the global assets of non-doms after heavy lobbying by the City of London.
“UK policy towards non-domiciled taxpayers (‘non-doms’) has lurched from piecemeal tightening under successive Conservative chancellors to outright abolition under the current Labour government,” Farage wrote in the Daily Telegraph on Monday.
“The result? A record-breaking and alarming exodus of high-spending, high tax-paying residents.”
Farage said during Monday’s press conference that luring back non-doms would mean more expenditure in the UK with more ensuing tax revenue.
“The upfront quarter of a million is the tip of the iceberg of what these people will spend in revenues and taxes in this country if they come back, just think of the average stamp duty they’re paying on houses they’re buying in Westminster or Chelsea, just think of the VAT they’re paying,” he said.
“These people are the big spenders. Yes, this is a sum of money that goes in one direction but it’s our very strong view this will generate a lot more wealth into the coffers.”
But Labour said non-doms would only want to pay for the Britannia Card if the fee charged was less than the amount of tax they already pay — and would therefore reduce overall tax revenues.
Labour said the policy was similar to the previous Conservative government’s regime, under which long-term non-doms could pay £30,000 a year to be taxed on a “remittance basis”. Traditionally, non-doms paid tax on UK income but usually avoided tax on foreign income and gains.
“Reform’s policy is equivalent to a £25,000 fee every year for non-doms, less than the previous fee under the Conservatives, which was £30,000 a year,” it added. “It therefore doesn’t just reinstate the Tory non-dom regime but makes the tax breaks even more generous than under the Tories.”
