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The Independent
11 hours ago
- Business
- The Independent
Will Reform's Britannia Card tax plan win back the super-rich?
In its latest stab at policymaking, Reform UK has come up with the 'Britannia Card'. It sounds like a kitsch gimmick from a building society, but it is actually the party's attempt to recast tax policy to attract 'wealth creators' to the UK. The policy supposedly offers a bonus to workers with the lowest incomes in the country, funded entirely from the one-off fees charged to non-doms – billed fancifully as a kind of Robin Hood tax. What's the deal with the Britannia Card? It is not completely clear, and much depends on how many very rich people come to Britain in response to the offer. In principle, it works a bit like this: someone very rich pays HM Revenue and Customs a one-off 'landing fee' of some £250,000. For that modest (to them) sum, they are free of all UK tax on their income and wealth from overseas. That means no income tax, dividend taxes, and no capital gains taxes on such foreign income, indefinitely. As well as that, they get a 'Britannia residency permit' that gives free entry and exit from the UK, renewable every 10 years – but not automatic UK citizenship (this is Reform UK, after all). This new breed of 'non-dom' - they'd no longer have to prove even a tenuous previous family or business link to the UK – would only have to pay tax on their UK income, such as it is, and their spending – stamp duty on their estates and mansions, VAT and other tax on luxury cars, employers' national insurance for the butler, that sort of thing. Where does the Britannia money go? To the poor! All of it! That's the magic – the lowest 10 per cent of all full-time workers would get a payment directly from the HMRC, depending on how many Britannia cards are sold per annum. Reform UK suggests that if 10,000 plutocrats decided to relocate to Britain every year, this policy would raise £2.5bn annually, equivalent to £1,000 per lower-paid worker. Sounds great. Are there any catches? Yes. One is that Reform's calculations ignore that some of the sought-after wealthy would actually lose out under its non-dom system compared to the current Labour regime; for example highly-paid professionals with savings back home are currently free of UK income tax for the first four years they're in the UK and only have to lay a fee of £30,000 or £60,000 a year. Under the Reform policy, they'd be whacked with a £250,000 fee immediately, plus full tax on any UK income. What would Reform's cost? A great deal. The Britannia Card scheme suffers from a common economic phenomenon called the 'free rider' effect. Thus it represents a huge tax cut for the mega-rich who are already here and plan and wish to stay here even under the changes the previous Labour and Tory administrations brought in, and whatever Rachel Reeves ends up doing. For them, £250,000 will be a windfall. Of course, some others may be attracted, on the same grounds, but HMRC would still lose out. Tax experts put it at £34bn over five years. It would make Kensington (in London, not Liverpool) even more expensive but not that much would trickle down. That means more spending cuts or borrowings to pay for a tax cut predominantly destined for some of the wealthiest people on earth. Any other benefits? Reform says it would mean 'wealth creators' would come and start businesses and revitalise the UK economy. Their policy paper contains impressive looking numbers about how much these types' 'investments in the UK' amount to – some in the tens of billions. However, how much of this is simply expensive real estate, collections of art and classic cars, shares in foreign companies listed in London, and US Treasury bonds is less clear. Super-rich non-doms might splash cash on lawyers, estate agents and tax advisers but their wealth-creating benefits for the nation can be exaggerated. They're not about to finance a new blast furnace for Port Talbot. Aren't we losing wealth and talent? Yes, but not necessarily enough to lose the benefit of a tougher FIG tax regime. Reeves and HMRC seem acutely aware of the trends in multi-millionaires and billionaires moving to Dubai or America, and have already started to ease some of the changes she made in her first budget, such as on trusts used to avoid inheritance tax. Will it work? The quirky old non-dom regime – unique to the UK and Ireland and not to be confused with 'non-resident' tax status – miraculously managed to survive for a century before it was seriously reformed, and now the tax system for the top echelons of society is much more changeable, and undeniably less attractive, to the footloose global rich. Reform says it can make its Britannia Card a contractual arrangement, protected from such political interference, but the fact is all governments love to mess about with the tax system, and no parliament can bind its successors. The costly Britannia Card rules could be abolished by an act of parliament passed in a day, and would probably have to be.
Telegraph
05-06-2025
- Business
- Telegraph
Rachel Reeves promised economic growth but has delivered stagnation
SIR – At the end of the 2023/24 financial year, government debt had reached £2.7 trillion. This debt is growing, and the cost of servicing it is in excess of £100 billion per year. Prior to the general election, Rachel Reeves's mantra was that growth of the economy was the only way to fix this problem. Since the election, she has concentrated on cutting a few billion here and there (mostly from the people who need it), awarding excessive public-sector pay increases to placate the unions, and increasing taxes on businesses. None of these will help the economy to grow. It is tinkering at best, and negligence at worst. The word growth seems to have been dropped from Labour briefings. Why? Christine Brown Richmond, Surrey SIR – Rachel Reeves and her team at the Treasury have unwittingly managed to set up a national tax-avoidance scheme. Individuals and businesses faced with a record-high tax burden are either packing their bags and leaving Britain, or stopping recruitment, letting go of employees and cancelling investment. Astonishingly, it appears to have been overlooked by the Treasury that penalising wealth-creators will stop growth in its tracks. David Chamberlain Houghton on the Hill, Leicestershire SIR – Many people who support net zero become less enthusiastic about it when they are required to take a financial hit ('Reeves forced to drop net zero cuts ', report, June 5). I wonder, therefore, if the Labour Government is telling the truth about the real cost. A 2021 report by the Office for Budget Responsibility estimated that, in order to achieve Britain's net zero emissions target by 2050, an investment of £1.4 trillion (in 2019 prices) would be needed. This is approximately equivalent to 23 years worth of annual UK defence spending. The necessity of investing in the Armed Forces to protect this country from Russian aggression is undisputed, but are we all agreed about bankrupting the nation for the sake of Ed Miliband's climate ambitions? Gerald Heath Box, Wiltshire SIR – In her long and detailed speech about the £15.6 billion to be invested in improving public transport, it would have been nice if Rachel Reeves had mentioned that a few pounds might be spent on upgrading bus shelters. In the past decade, they have taken over from public telephone boxes as examples of shabbiness and squalor, discouraging potential passengers. Those in my home town are a disgrace, and no one seems to have the will to improve them. I assume this is because few politicians, at any level, ever travel by bus. Jane Moth Stone, Staffordshire
