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US bosses quit London over non-dom payment
Benedict Moore-Bridger, Evening Standard25.02.08
Nine senior American directors of top international companies are preparing to quit London over the controversial "non-dom" tax proposals, the Evening Standard has learned.
The directors, who want to remain anonymous, work for companies including Bank of America, McDonald's, Ernst & Young, and Bear Stearns.
City sources have revealed that they have issued notice to move back to America after the Government proposed charging foreign workers resident in Britain an annual £30,000 levy.
Dozens more workers from FTSE100 companies across the banking, oil, electronic, automotive and telecommunications industries, are also planning to leave London for rival financial centres to avoid the levy.
The revelations come as a poll for the Standard shows concern that the crackdown on the non-doms could affect London's future as a financial hub, with 37 per cent regarding Chancellor Alistair Darling's plan as a "bad thing" as opposed to the 28 per cent who backed it.
The Prime Minister Gordon Brown and Mr Darling are also facing criticism over the plans from the Mayor Ken Livingstone who warns that they risk damaging Britain's economy with the levy.
The move by the nine Americans is the first concrete evidence that the tax could force hundreds of City workers to leave the capital, taking investment with them.
One source told the Standard: "These are serious players in the City, who are quitting because of the proposed laws. They are major players who will be taking major investments with them... and this is just the tip of the iceberg."
At the same time, up-market estate agents have reported massive falls in the corporate rental market because so many senior executives want to leave London and flee tax bills which threaten to rise by hundreds of thousands of pounds. Experts warn that foreign workers resident in London, who have grown-up children, could face bills of at least £120,000 for a family of four.
Trevor Abrahmson, of Glentree International estate agents, said: "Several top City executives are going to Geneva, Dubai and Monaco. "They are very rich people who have homes around the world but a family of four would have to earn £200,000 before tax to pay the new non-dom levy, so it is a significant amount, even to them. "They are going to sell their houses in Mayfair or Kensington and Chelsea, dumping them on the market at an already difficult time. Then they will take their business overseas.
"Competing cities such as New York, Geneva, Monaco, Dubai and Frankfurt, would welcome these wealthy nondom businessmen with open arms."
Several associations in the City have decided to petition the Government to popstpone its plans for the "non-dom" levy for at least one year.
The London Investment Banking Association, the British Bankers' Association, the City of London Corporation, the CBI and London First will all make submissions to the Treasury by Thursday asking for a 12-month coolingoff period for the tax proposals to be debated properly.
Liba director Ian Harrison said: "The tax proposals for 'non-doms' have not been as well researched or as well thought out as they should be. In some cases they are highly complex and unworkable."
Mr Harrison added: "We estimate about 40 per cent of the 100,000 investment bankers who work in London - most of whom are senior managers or young graduate recruits in the banks - will be affected by these changes."
Individual banks, including the big US houses, are also protesting against the plans. A source has revealed that investment bank Goldman Sachs, which advised the Government on the Northern Rock saga, has held meetings with the Treasury on the subject.
Senior ministers are also understood to be concerned over potential damage to the UK and want the tax either changed or delayed.
Bankers fear the changes may prompt the bigger US houses to relocate their Europe, Middle East and Asia operational headquarters out of London. One said: "London may be the best centre now but once a big US bank like Citigroup thinks that its bankers are being penalised it will move very easily - Dubai, Geneva or Dublin. They are all serious alternatives.
"These proposals have been put through in a rushed, cack-handed and ludicrous manner. The City accepts that there should be equity over the tax treatment of domiciled workers and non-domiciled. However, the Government has once again rushed into this mess without thinking through the consequences, which could be severe."
Reader views (17)
Does this apply to me? I have been resident here 10 years, and am non-domiciled for tax purposes. I earn around £40k pa. I have investments in the US amounting to under $20,000 (in tax protected annuities), which means that I don't pay tax on them here (or in the US, because of their protected status). I do pay tax on my UK earnings - just like any citizen of the UK. I cannot possibly afford £30 pa just to live here, but this is my home - how is this fair?
Not all non-doms are wealthy city workers with 6 figure salaries and even bigger bonuses.
- Andrea, London
The income gained abroad by the non-doms never enters this country anyway because otherwise it would be taxed. Many of the companies they work for pay them offshore and have offshore structures to avoid corporation tax. Working for Board Directors of international companies I have seen it again and again... Now the Government is clamping down on these practices because they need money (and I'm not saying Government have not wasted and occasionally bagged our hard-earned cash) but the non-doms are simply not pulling their fair share. These people still think there is no such thing as society.
- Esther Phillips, Leatherhead
Why is that Darling guy in a financial job I do not understand?!
- Steveo, Islington, London
I think it is clear from this that only those directly affected understand this issue... the general public do not. Bobby what do you think fuels the economy? that's right, all those 'trophy wives' keeping up consumer spending... I would avoid using the NHS at all costs even if someone DID in fact pay me to use it, and still I pay for others to use it even though I myself have private insurance (as do all of my colleagues who work hard and pay maximum tax), how fair is that?
PAID to use the roads? do you think that the evil non-doms do not pay road tax on their 10 Ferraris?... or the congestion charge? do you think they don't pay stamp duty when they buy their 5th property? Remember income tax isn't the only tax around...
- Mt, London
Mick, what are you talking about, you will find that there is a difference between non-dom and resident, that is the whole point... I am resident here but non-domiciled, you can be both ie you live here but count as non-domiciled for tax purposes - and it doesn't mean that you are not paying tax either, it is more complicated than that. Do some research... anyway rich Arabs, Russians etc that live in the UK contribute much more to the economy than they take out that's for sure... they all have private insurance (even if they don't work) and the kids go to private schools!
- Maria, London
Will Mr Darling and his real boss pay my wages and all the other back office people who work with these non-dom executives when they move out? Has he thought about the numbers here, I stop paying tax, stop paying transport costs, multiple this by thousands of Mr Darlings and work out what you are loosing.
Mr Brown open your eyes and understand you are killing the city as a financial centre
- Ian Makin, Twickenham
If taxes weren't so high and the cash raised by them not habitually misspent through government ineptitude, there would not be such effort made to avoid paying them.
- Keith Lonsdale, Doncaster
My god, 10 to 20 people want to leave the country. Catastrophe.
What makes the bankers and other millionaires believe that they are in charge of policies making in the UK.
Personally, the less of these fat cats around, the more chances for us, humble servant, to have an affordable life.
Good luck to them to get residencies permit in Monaco and Switzerland, as for Dubai, it looks like an unlucky place for people that drinks and take drugs on a regular basis.
- Lauren, london
Esther - They may well roast in Dubai, but as this Nation no longer has a manufacturing sector, we will soon freeze if the 'City' moves out of London. Are you willing to pay the extra taxes needed to subsidise, for instance, those UK cities where the majority work for local government.
- Dave Bristol, Bristol England
If the US bosses depart does that mean that there are more jobs for Brits?
Perhaps there are STILL some individuals who are prepared to pay tax in the country in which they are living and working?
- Fraser, Telford Park
It is a real stupidity to target what is left of the UK economy. Ten years of Labour and there is not much left to tax! How quick has the recession come - we just had a banking crisis and still Labour does not know when the party is over...
- Jacqueline, Hampstead, London
As always taxes are designed to hit the middle classes rather than billionaires who should be made to pay more.
- Nick, London UK
Heaven forbid someone should be, legally, better of than us! Envy is the most insidious and corrosive form of sin. What benefit to the country is it if these people leave?
- Jan Bors, London UK
Surely this has been on the agenda for over 10 years - if 30,000 is too much to pay as a non-dom then why not register as a dom as the rest of us are and pay a normal tax bill. If you're a 'young graduate' working in a bank in London why should you be non-dom other than to avoid paying a fair share of tax?
- Chris, London
If they move to Frankfurt they will find the German Government take tax evasion a lot more seriously than the British Government and practically all the US candidates have decided to address the issue of taxing the super rich to the same proportion as other people. Let them roast in Dubai if they want.
- Esther Phillips, Guildford
These are rich people. One of the reasons they are rich is that they do not pay their fair share of tax. If they are non-domicle then surely they do not live in this country so how can they be leaving. Their "homes" must be vacant most of the time. So it will be good if they sell them as it will provide a home for some one who does here.
- Mick, London, England
It is very important that cleaners, on minimum wage, should pay proportionally more of their income in tax than those 'non-doms' who are on their last 5 properties and may have to delay buying their next Ferrari by over a year. It should be a priority that the low paid are denied any social mobility and are locked in a poverty trap that means of the next pound they earn 35% goes to the taxman. I feel it is right that investment bankers, particularly those that have just put the stability of the global economy in to tailspin, should be allowed to buy as many third homes, fourth cars and £5000 hand bags for the trophy wife. This will help to ensure that the poor still have offices to clean, demonstrating once again the magical power of 'trickledown economics'. It is also fair to suggest that the 'non doms' should be PAID to use the NHS, the police and fire services and the roads. Only if we given them benefits not enjoyed by everyone else can we ensure that they continue to enjoy a life style denied to the rest of us. I'm off to eat some cake!
- Bobby Smith, Surrey, UK
