What does Brexit mean for UHNWIs in Britain? Who knows – it very much depends on who will be our next leader and what his or her vision of Britain outside the EU will be. There is a global need for what we can offer, but we need someone with the guts to grasp it.
Our strengths on the world stage are that the UK is the world’s leading financial centre and undisputed centre for UHNWIs. The country needs now unashamedly to position itself as the world’s leading financial centre - offshore.
Our weakness is that the UK now has a politically unacceptable gap between the country’s very rich and our working middle class; doctors, teachers, accountants and architects. George Osborne has been set upon addressing this divide by pulling the rich down with swingeing taxes and eye popping fees. He has hiked stamp duty land tax up to 15%. Three years ago the boroughs of Westminster, and Kensington and Chelsea accounted for more revenue from stamp duty land tax than Scotland, Northern Ireland, Wales and northern England put together, this has now fallen by half.
In addition, he has introduced an annual tax on enveloped dwellings and extended inheritance tax on all UK homes. The result is stagnation of the high end property market to the detriment of all businesses which cater for this market; architects, builders, interior designers, plumbers and estate agents.
Rather than making the rich pay their fair share of tax, the UHNWIs are confused and bewildered. Are they still welcome in this country? The new taxes introduced over the last few years have sent out the wrong message. What we need is for the rich to live and invest in the UK, not to drive them away and to penalize them when they bring their wealth into the country.
However, we do not have the luxury of time.
The world needs to know that we are serious about wanting to attract business into the UK. If we don’t we will be negotiating from a position of weakness; trading agreements, treaty concessions or the terms on which we exit the EU.
As a Fellow of the Chartered Institute of Taxation and leading private client lawyer, a new leader could do this very simply with a few tweaks to our tax legislation
· lower the rate of stamp duty land tax to 4% (the same as for commercial properties) for all residential properties other than properties owned by non UK residents. This will send a clear message that we want to encourage the wealthy to buy in our country provided they live here and pay taxes as UK residents
· provide an exemption for every non dom who lives in this country and brings wealth into the country to be managed in the UK, or invested in the UK. I cannot see any logic in attracting the rich into our country, and then to stop them bringing in their wealth for us to manage and invest
· tax all remittances to the UK to income tax regardless of the source of funds, which will make the remittance basis of taxation much fairer and simpler to operate
· remove the fee for the remittance basis of taxation
· encourage all non doms with trusts offshore to bring them onshore with full income tax and capital gains tax exemptions and to extend the inheritance tax exemption to UK situs investments. The UK is the founder of the trust, but has taxed trusts so savagely in recent years that they are no longer created in this country. This would provide a much needed boost to our tax and trust industry; lawyers, barristers and dispute resolution experts
· lower the rate of VAT for non-luxury goods and services.
Taxing the rich at unacceptably high rates is not good for the country. With the vote to leave the EU and resignation of Cameron, we now have the opportunity to play to our strengths. In so doing we can once again become Great Britain; rather than Little England.
If you are in agreement with my views, please share this with your MP and in particular to all candidates who have put themselves forward to succeed Cameron.
Caroline has written two books ‘When you are Super Rich who can you Trust’ and ‘How to win business from Private Clients’.
If you would like to book an appointment to see Caroline for estate planning, offshore trust review or succession, or any one of her colleagues for dispute resolution, family issues or investment strategy, or buy a book please contact svetlana@garnhamfos.com or call 020 37407423.