ALEX BRUMMER: The rich are fleeing abroad in fear of PM Jeremy Corbyn

The rich are already fleeing abroad in fear of Prime Minister Jeremy Corbyn… and it’s the poor who will suffer, writes ALEX BRUMMER

Putting to one side its beaches, its cuisine and Cristiano Ronaldo, Portugal is Europe’s ‘best-kept secret with its English-fluent labour force and excellent quality of life’.

Italy, meanwhile, is one of the ‘most sought-after destinations’ offering some of the ‘best appointed luxury properties’ in Europe.

These are not extracts from next summer’s travel brochures. 

They are the words of top accountants and tax advisers who are busy luring the super-rich away from their long-standing base of Central London to more attractive Mediterranean climes.

The Portuguese capital, Lisbon, is a particularly attractive proposition and not just because of its clement weather, fine fish suppers and good-value property prices.

Three years of Brexit uncertainty and the terrifying prospect of a Jeremy Corbyn government are scaring the wealthy in this country witless

The country has started offering new ‘high-value’ arrivals a benefit called ‘non-habitual residency’ — effectively a tax holiday for the first decade of living there. 

This peculiarly generous offer applies not only to money earned and made in the country but also to income from overseas.

Italy, meanwhile, has also been tempting the wealthy to move to Rome and to the stunning Amalfi Coast by offering non-doms an attractively low annual tax bill on income earned overseas.

What’s more, the ploy seems to be working. Three years of Brexit uncertainty and the terrifying prospect of a Jeremy Corbyn government are scaring the wealthy in this country witless.

And for good reason. Yesterday, Labour’s Marxist leader outlined his Soviet-style vision for Britain, which included calling for the return of collective bargaining, the policy that almost brought Britain’s industry to a standstill in the 1970s, and the creation of an Orwellian-sounding Ministry of Employment Rights.

Yesterday, Labour’s Marxist leader outlined his Soviet-style vision for Britain, which included calling for the return of collective bargaining, the policy that almost brought Britain’s industry to a standstill in the 1970s (Corbyn pictured at the TUC Congress in Brighton yesterday) 

Obsession

Replete with policies symbolic of the hard-Left’s obsession with state control, Corbyn’s speech was a warning shot to non-doms who haven’t already fled the country.

The increasing boldness of Corbyn’s agenda goes some way to explaining why the number of individuals claiming non-domiciled taxpayer status on their self-assessment tax returns is dropping sharply — from 90,500 to 78,300 in the 2018 financial year.

Non-dom individuals resident in Britain are taxed only on the income and capital gains that arise in the UK, as well as on cash brought into the country.

Yet, despite this attractive tax perk, they are leaving because they fear a Corbyn government will target them.

But it is not just non-doms who are on their way. Other wealthy individuals who do not have non-dom status are also looking at escape routes.

As the boss of a leading private equity firm explained to me this week: ‘All of us and our investors have set up shadow offshore bank accounts in Lisbon, Luxembourg and other places with global firms such as the Royal Bank of Canada.

‘The last thing we want is to find our income trapped in the UK because Corbyn and John McDonnell have imposed capital controls.’

The abolition of capital controls — rules governing how much sterling can leave Britain — was among the first financial measures taken by Margaret Thatcher’s first government and it helped usher in a new age of free-market capitalism, growth and prosperity.

Sensibly, when the Blair government swept to power in 1997, it did not reimpose them and the prosperity continued.

The ‘princelings’ behind our private equity firms are determined to make sure that the profits and bonuses they make are out of the reach of pernicious taxation.

Which is why capital is already on the move. A recent survey by data analysts EPFR found that $1.01 trillion (£916 billion) has left equity funds, money invested by London-based asset and wealth managers, since the Brexit referendum.

The Marxist clique running the Labour Party might think that the warnings from the City about capital flight are no more than a myth designed to scare them into moderating their policies. But the flight is actually happening.

And the fact is that the combined exodus of non-doms, wealthy individuals and capital costs Britain dearly.

Data released by HMRC in August shows that the alarming number of non-doms leaving Britain for more tax-friendly locations such as Portugal have already delivered a heavy blow to the Exchequer and the public finances.

The amount of income tax, capital gains tax and National Insurance contributions paid by non-doms, such as the Indian steel tycoon Lakshmi Mittal and countless Russian oligarchs, plunged from £9.49 billion in 2016-17 to £7.54 billion in 20717-18 a thumping drop of 20.5 per cent.

Replete with policies symbolic of the hard-Left’s obsession with state control, Corbyn’s speech was a warning shot to non-doms who haven’t already fled the country

The accountancy business advisory firm Moore Stephens BDO forecasts that as many as 26 per cent of non-doms could leave the UK.

It notes that the taxes currently raised from this group in one year amount to more than the Government collects from inheritance tax, tobacco duties or customs duties. 

And the big firms of accountants and City lawyers are adamant that the main reason for the non-dom exodus is uncertainty about the future political climate in Britain after we leave the EU.

Most serious among their concerns is the prospect of a Labour government prepared to hammer not just the non-doms but bankers, hedge-fund managers and traders who have contributed to Britain being a world capital for finance.

‘Almost universally the fear is not the repercussions of Brexit or the possible disruption of No Deal but the potential of a far-Left, Corbyn-led government.

‘If this were to happen I could certainly see a much wider scale of exodus beyond the non-dom community,’ says Simon Malkiel, tax and estates planning partner at law firm Howard Kennedy.

Loss

When non-doms leave, it is not just the Exchequer which suffers. One flower seller, in a well-heeled part of West London, bemoans the fact that the departure of one of his customers means he has lost a handsome daily order to fill an entire home with flesh flowers.

An acquaintance of mine, who builds and refurbishes small blocks of apartments in Central London, says that in the past his developments have sold like hot cakes, largely to overseas buyers.

He is currently sitting on a development of 16 residences, of which none have sold. Labour may claim that the loss of the non-doms is a small price to pay for dampening the property price boom in London and the South-East and creating a fairer society.

But the non-dom exodus and the loss of a chunky £2 billion or so of tax they contributed in just one year, demonstrates the true harm to public finances and the quality of local services that could be caused by effectively exiling the well-off in any economy.

Extreme

When a non-dom flees Britain, he or she takes their business — whether it’s the employment of a local dry cleaner or their dependence on a local shop — with them.

Labour fails to appreciate that as more and more of these wealth generators leave, the economic vacuum left in their wake will slowly trickle down, leaving the poorer members of society out of pocket.

To witness the phenomenon at its most extreme you need only look at Venezuela, once Latin America’s richest country due to its oil, and now an economic basket case thanks to its punishing Marxist policies.

But it’s also happened in France, where the socialism of President Hollande drove entrepreneurs and bankers overseas, mainly to the UK.

There is no escaping the fact that the top one per cent of taxpayers in Britain pay 29 per cent of the nation’s income tax, not to mention their contributions in VAT, stamp duty, airline passenger duties and so much else.

In this digital age, it is not just money but intellectual capital which is mobile.

And the prospect of state socialism under Corbyn is already mobilising that capital — and threatening to denude the very businesses on which Britain’s post-Thatcher renaissance was based.

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