The insane government rules that are driving investment away

A battle is raging in Downing Street. On one side are those who want to see Britain “open for business” and attracting the world’s wealthy, wishing to see them spend and invest. On the other are folks who regard anyone earning more than £40,000 as rich and anathema.

The first lot wish to attract foreign companies and entrepreneurs; the second see them as to be avoided or, at least, if they do come at all, to be milked for taxes. It’s a fight of ideals but also of reality – while it ebbs back and forth, other nations are doing their level best to attract the international business community, offering them “golden tickets” and visas, making life for them as easy and as attractive as possible.

In the middle of the fray sits Keir Starmer. One minute, when Donald Trump is in town, he is all gung-ho; the next, when he is with the left, he is hesitant and cautious. He’s got people around him who get it, who know what is needed, such as Darren Jones, nicked from under the nose of Rachel Reeves at the Treasury, and Varun Chandra, his business adviser, best there is, seated at the Windsor Castle banquet.

But they are matched by Reeves and her team, among them Torsten Bell, arch-prophet of redistribution of wealth. They are busy throwing out ideas to raise taxes. Firmly in their sights are those they deem can take the hit, so that’s those they consider wealthy. That includes businesses and their bosses, the people, in other words, who might choose to put their cash into Britain and create jobs and generate income and drive that “further and faster” growth pledge Reeves likes to make, but who may think again.

They are doing everything in their power to resist, to obstruct and to plunder. Take those rich foreigners. You would think that we would be bending over backwards to make them choose Britain. But oh no, we’re driving them away. The effects of that policy are there for anyone to see – London restaurants reporting 30 per cent revenue falls, the prime property market stagnating and impacting downwards through the sector, jobs being lost rather than newly established, charities and good causes suffering drops in donations.

I bet you’ve never heard of FT, AT, WT, NT, CT. But I can reveal that if you’re a rich foreigner, thinking of doing business here, you know all too well what they mean – your tax lawyer at the very least will tell you what they mean.

If you are resident in the UK, you’re liable for income tax on all UK employment income and income from other UK sources, such as UK-based investments or UK rental income. You could also be liable to pay income tax on all foreign sources of income.

There is a way round this, which is to apply to become a “non-dom” – a UK resident whose permanent home or domicile, for tax purposes, is outside the UK. But this regime, and the previous Tory one, made plain their desire to scrap this privilege. Rachel Reeves said she was doing so in her first Budget, then, after a storm, softened slightly. Reforms covering the transition to total abolition have been made. Make no mistake, though: Reeves and the Treasury want non-doms to end; it is only a matter of time.

The left and their helpers in the Treasury and Inland Revenue wish to ensure that the resident net is applied as widely as feasible, that it literally is a catch-all or as near as damn it.

They apply no fewer than five – count them – “ties”: family or FT, which is if you have a spouse, civil partner or child who is resident in the UK; accommodation or AT, if you have a home in the UK which is available for you to use for more than 90 consecutive days a year; work or WT, if you work in the UK for three or more hours per day on at least 40 days in the tax year; 90 days or NT, where you have spent 90 days or more in the UK in either of the previous two tax years; country or CT, if you have spent more days in the UK than you have spent in any other country in the relevant tax year (although this only applies in a year if you are leaving the UK).

Follow that? Now this. You will be resident in the UK and snared for tax, if you have:

Whaaaaat?

In this real-life example, a seriously wealthy foreigner, one of the very richest, wants to come and go from Britain. He loves this country and is keen to spend and invest here. He has substantial business interests worldwide. He is a major philanthropist. He can live anywhere he chooses. His favour is in demand across the globe. His family is here and so is his family office, which employs 17 people.

As he puts it, “I’ve been advised by my lawyer that my wife lives in the UK, so that’s FT and I lose 30 days”; “my family investment office is here but WT says I can only work three hours a day for 40 days – any more and I lose another 30 days”; “I have a house here but if I stay there one night, that qualifies as AT and I lose another 30 days, which is why I stayed at the Dorchester Hotel when I was recently in London. Ridiculous!”

It's nuts. The signal it sends is terrible. The only winners in this are the officials who get to monitor this stuff and keep their jobs, and the lawyers. Oh, and those who believe clobbering the rich is economically beneficial and see this as part of that approach. Plus, not forgetting those nations that witness how Britain behaves and chortle and give thanks.