The flat tax regimes that inspired Farage's plan to lure back rich non-doms

Telegraph

4 hours ago

Nigel Farage is hoping an Italian-style flat tax regime will lure wealthy foreigners to Britain's shores.
The leader of the Reform UK party has promised to impose a Robin Hood-style levy on rich non-doms, with the proceeds then redistributed among the lowest-paid workers.
At first glance the policy may seem Left-wing, but in practice it is the wealthiest non-doms who would benefit the most from this generous scheme.
The one-off payment would grant them a 'Britannia Card' which comes with an indefinite tax-free exemption on their offshore income and gains.
It could potentially save a high-income worker tens of thousands in tax over the years. Reform said the tax status could be renewed every decade at no extra cost.
The proposal comes amid fears that Rachel Reeves's decision to abolish the non-dom regime last August has triggered an exodus of high-income workers and entrepreneurs. Estate agent Knight Frank has estimated that the Treasury faces a £401m loss in stamp duty receipts thanks to a drop in sales of multimillion-pound homes since the reforms were first announced.
The non-dom regime was replaced in April 2025 by the Chancellor's foreign income and gains regime, which allows new arrivals to avoid tax on offshore earnings for only their first four years of residence. Controversially, it also applies inheritance tax to the worldwide assets of individuals who have been in the country for over 10 years.
By comparison, Mr Farage's proposal would shield eligible individuals from inheritance tax for 20 years.
Writing in The Telegraph, Mr Farage said the policy would 'actively encourage the return of wealth and talent to the United Kingdom'.
However, experts questioned how successful it would be in practice.
The think tank Tax Policy Associates warned it could cost the UK £34bn in lost Government revenue.
Miles Dean, of tax adviser Andersen, said: 'I fear that the damage has already been done and I doubt that this alone is enough to entice wealthy non-doms back, especially given that implementation is at least four years away.'
David Denton, of wealth manager Quilter, said: 'Offering wealthy non-doms the chance to effectively buy their way out of UK tax may provide a short-term revenue boost, but risks creating a two-tier tax system that undermines public confidence.'
Mr Denton also said there was no guarantee the regime would attract enough wealthy individuals to build a sizable pot for low-income workers.
'The idea of redirecting funds to support lower earners has populist appeal, yet it assumes significant and sustained uptake from globally mobile individuals – something far from guaranteed, particularly if future governments reverse course.'
But the flat tax regime is far from a new concept. Other countries including Italy and Switzerland have also tried to entice wealthy expats through similar tax breaks.
Italy
Reform's offer to non-doms appears to be considerably more generous than Italy's, which first unveiled a flat tax regime for wealthy foreigners in 2017. Costing €200,000 (£171,390) per year, the scheme is renewable for 15 years and exempts non-doms from tax on foreign assets, with the option to add additional family members for €25,000 (£21,423) per person per year.
It has proven to be a runaway success. While just 98 people used the scheme in 2017, by 2023 more than 2,000 taxpayers were enroled, according to citizenship by investment firm Relocate&Save.
Mr Farage will give high-net-worth individuals a 20-year reprieve from UK tax, including inheritance tax, on worldwide assets and income for a one-off cost of £250,000. By comparison, to use the Italian scheme for 15 years would cost €3m in flat tax fees, making Reform's plan extremely competitive.
Dominic Lawrence, partner at law Charles Russell Speechlys, said: 'The Reform proposal does appear to be more generous than the Italian lump sum tax regime, which requires payment of an annual levy of €200,000. If the proposed £250,000 payment really is one-off and there is no additional annual charge to access the remittance-style regime… then on the face of it this is remarkably generous.'
Switzerland
Mr Farage's proposals also go further than tax reliefs available to non-doms in Switzerland, which pioneered tax breaks to lure wealthy foreigners.
Don-doms in Switzerland do not pay a flat fee to take advantage of favourable tax rules. Instead, taxes are based on the living costs incurred whilst in the country, which includes costs for housing, food, transport and leisure.
The minimum these costs must be to qualify for the scheme is CHF 434,700 (£396,844) a year. The sum is then subject to tax rates that vary by region in the Alpine country, typically resulting in a tax burden between CHF 150,000 (£136,937) and CHF 350,000 (£319,520).
In return, foreign income and assets of non-tax-residents are exempt from taxes and Switzerland imposes no federal inheritance or gift tax. Different minimum tax bases apply for EU and non-EU applicants depending on the region of Switzerland in which they reside.
Greece
Greece has been tipped as one of the countries set to benefit from the abolition of the UK's non-dom regime.
Since 2019, it has offered a favourable tax regime which requires high-net-worth individuals to pay a lump sum of €100,000 per year on foreign-sourced income. They can claim the tax break for up to 15 years. For an additional €20,000 a year, they can also extend the tax benefit to members of their family.
To use the scheme, the high-net-worth individual must invest at least €500,000 in Greece within three years, for example by purchasing a property or buying shares.
Gibraltar
The British Overseas Territory, located on the southern coast of Spain, offers an attractive tax regime for individuals worth more than £2m.
Under the so-called 'Category 2' rules, qualifying individuals only pay tax on the first £118,000 of their worldwide income. This means a maximum tax charge of about £45,000 per year. To qualify, individuals must either own or rent a property in Gibraltar.