Scrapping the remittance basis of taxation in the upcoming Budget would harm the UK economy and Franco-British relations, say leading tax and advisory firm Blick Rothenberg.
Vanesha Kistoo, Global Mobility Partner at the firm said: “If our expatriate regime for non-UK domiciles is scrapped as is rumoured, this change will likely further discourage FDI from French entrepreneurs into the UK, currently one of the top two European destinations for FDI. The increased cost of doing business in the UK post-Brexit and the rigorous and expensive visa process already discourages many from coming to the UK.”
She added: “Residents in France are taxed in France on their worldwide income and assets. Whilst both France and the UK have a progressive income tax system and high earners are subject to tax at 45%, the UK does not have wealth tax and those who reside in the UK with a non-dom status can shield the return on their non UK investments from being taxed in the UK.
Vanesha said: “According to the 2021 UK census, the number of residents of England and Wales born in France was just over 150,000. The number of high-net worth French born individuals in the UK is already on the decline, over 10,000 have left the UK since 2017.
“European countries such as France, Italy, Spain, and Portugal have attractive tax regimes for expatriates. As the super rich choose Paris over London, the damage to the UK economy and our property market will no doubt be felt.”
She added: “The total trade in goods and services (exports plus imports) between the UK and France was £103.4 billion in the four quarters to the end of Q3 2023, an increase of 18.1% or £15.8 billion in current prices from the four quarters to the end of Q3 2022. A change in the expat regime should not directly impact on the trade in goods and services but if the Franco-British relationship becomes tense, we will start to see a decline in activities.”
