Paul Lewis

More Lewis on the web

180407 - Inflation rises

110407 - The Chancellor's record

280307 - Council tax: rises and rebates

210307 - Budget and the pensions campaign

140307 - ISAs

070307 - Inflation

280207 - Share prices

210207 - Bank charges

140207 - Personal information

080207 - Online accounts

310107 - Mortgage exit fees

290107 - Pension funds

240107 - Payment protection insurance

170107 - National Insurance

Rich pickings - 250407

This weekend the new Rich List is expected to reveal that there are about 65 billionaires living in the UK. But barely a dozen of them are British. The rest are people who live in the UK as a way of avoiding tax. Unlike most other countries the UK does not tax foreign residents on their world wide income

That generous regime is so attractive to wealthy individuals that a paper for the International Monetary Fund has recently listed the UK along with the Cayman Islands, Bermuda, and Panama as 'offshore financial centres'. In other words tax havens.

The loss to the Exchequer is colossal. Accountants Grant Thornton have estimated that 32 out of the 54 billionaires listed in last year's Rich List paid no personal tax in the UK at all. Altogether the accountants reckoned that between them the UK billionaires paid barely 0.01% of their fortunes in tax.

Now I have nothing against the rich. But there is a strong argument that if they live here they should be treated like the rest of us and pay tax on their income wherever in the world it is made. That is what happens in most other western countries.

In the 2002 Budget the Chancellor said "To ensure fairness for taxpayers and businesses, we also must act swiftly to close tax loopholes and be vigilant against tax avoidance. I…am reviewing the complex rules of residence and domicile." A background paper published in 2003 set out the current regime and principles for change. After four years of silence the 2007 Budget reported that the review was 'ongoing'.

That phrase suggests the Government has quietly shelved the plan, terrified that wealthy foreigners will leave the UK and take with them their spending on property and luxury goods which helps support the economy.

They avoid tax by taking advantage of rules which mean that foreign-born residents generally do not pay it on any income or capital gains arising outside this country. That is because even if they live here for many years they remain what is called 'domiciled' elsewhere. Domicile is an ancient legal concept which basically means where your heart is. And however long you remain in another country if you still 'feel' Russian, or Greek, or Indian then you are not taxed on income you make outside the UK.

The rest of us – who have our domicile here in the UK – are taxed on all income and capital gains wherever it arises around the world. Which means every penny we earn over £100 a week – or £145 if we are over 65 – is taxed. And next year taxed at 20%.

It really is one law for the rich, and quite another for the poor.

This article was created: 25 April 2007.
This article was last edited: 25 April 2007.

Email Back to top

Site map | About Us | Privacy policy | Contact Us

Paul Lewis

More Lewis on the web

More from Saga

Rich pickings - 250407