It is certainly a tax grab and there are many, such as Richard Murphy of Tax Justice, who argue eloquently in favour of such egalitarian action.
It remains to be seen whether the measures which will be implemented next April will turn out to have been either wise or just.
From next April, non domiciles, living in the UK for more than seven years, will have the choice between paying a levy or 'fine' of £30,000 or declaring their world wide assets and bringing such assets into the UK tax net.
This levy will of course represent an actual amount of £50,000 because that amount of money is what will be needed, after either income tax or CGT payment, to generate the £30,000.
If one opts for the levy route, one will loose one's UK tax allowance, currently worth some £5,225 pa on any income which is remitted to the UK and thus subject to normal UK tax rates.
The levy, because it is termed a 'levy', is an amount which falls outside any UK tax treaty with another country. In particular this will effect the American community in England because they will not be able to take advantage of the US/UK tax treaty and the witholding relief, at 15%, which this treaty currently affords. Those Americans, resident in the UK, will end up paying double tax.
The consultation paper carries this levy idea further and proposes an increase of the levy from £30,000 to £50,000 for those who have been resident in the UK for longer than, perhaps, seven years. This is a pleasant little threat on the horizon for those who might wish a continuance of residence in a country which is not their natural home.
The alternative to this levy route is for a non domiciled resident to pay UK tax on their world wide assets, so long as they are resident in the UK, which in turn implies that they spend more than 90 days, rolling average, in the country in any one year. The government is holding back on publishing their final proposal and now does not intend to do so before February 28th, 2008. This will give anyone who wishes to avail themselves of the total tax route, some five weeks, before April 5th, 2008, in which to arrange their financial affairs so that they may take advantage of whatever tax planning structures are available to a normal UK resident. This is not a lot of time.
It is hardly surprising that many of those who work for companies with an overseas flavour that operate in the UK, finance houses, finance consultancies, the Baltic Exchange, oil companies and, well, the list is endless, are thinking of departing the shores of Albion.
Oh, absolutely good riddance of course, of course and of course!
Except that most of those who will be affected by these new tax changes do not send their children to state schools, do not burden the NHS and do inject considerable amounts of cash into the UK economy in the form of the taxes which they do pay and the money they spend in the country. Most of those foreigners targeted by these latest proposals would not dream of being a burden on the British state and thereby inflict upon their loved ones the appalling ravages of the UK state schooling system or its mortuary of a public health domaine.
Indeed, the German confederation of industry, which represents some two hundred and fifty German companies which operate in the UK, has very recently sent a letter to the Treasury. In this letter it was pointed out that Britain is in fact considered so expensive and so ghastly a place to live, by European standards, that an incentive such as a tax exemption was necessary to lure those with the requisite expertise which British industry requires to these rainy and gloomy shores in the first place.
Those are some of the facts.
Whether the government's proposals are fair is a question which may be of interest and exercise to the more socialistically inclined green eyed peculiarities in our midst. Whether the proposals are wise and whether, when put into force, they will be good for the economy is another question altogether. There are those who do wonder whether it was really a good idea to so seriously upset a stable and profitable status quo which has worked well for some two hundred and fifty years.
As for BALPA, it would probably be a very good idea if pilots in general avoided attracting too much UK revenue attention towards themselves at the moment. Pilot persecution or even prosecution would represent a very good general test case for HMRC on which to hone its newly acquired counting of the days. Pilots, unlike lorry drivers or coal miners, are not renowned for collective action in the face of oppression.
