Ultra-rich attract interest in Britain's general election campaign

London, London, Great Britain (UK)Updated: Dec 11, 2019, 11:25 AM IST

An umbrella featuring Britain flag (representative image). Photograph:(Reuters)

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The 1,000 richest families and individuals have a record combined wealth of £771.3 billion ($1.01 trillion, 916 billion euros).

Britain's general election campaign, which ends on Wednesday night, has turned the spotlight on the closed world of the ultra-rich.

The main opposition Labour party has repeatedly attacked tax avoidance and evasion and promised to renationalise key industries, including mail delivery, energy and the railways.

Billionaire mobile phone magnate John Caudwell on Monday warned Labour tax hikes for the top five per cent of earners and business tax would stifle investment.

But the ruling Conservatives, who are promising across-the-board tax cuts, have been more accommodating, proposing few changes that would alter Britain's status as an attractive destination for the elite.

Who are the ultra-rich?

The Sunday Times in May said there were 151 billionaires in Britain. The 1,000 richest families and individuals have a record combined wealth of £771.3 billion ($1.01 trillion, 916 billion euros).

Those with the biggest fortunes come from across the world, including Russia and Asia.

The Indian-origin Gopichand and Srichand Hinduja brothers head the list with £22 billion, with the Russian businessman Alisher Usmanov eighth, just in front of his compatriot Roman Abramovich.

Favourable tax regime

Britain owes its special status to its tax regime, especially the "non-dom" status that allows some British residents to maintain fiscal residency overseas and not pay income tax on earnings from outside the country.

"The UK provides an attractive tax regime for foreigners who have large amounts of income from investments because this is the easiest type of income to shelter from UK taxation using the 'non-dom' regime," said Andrew Summers, from the London School of Economics.

According to the revenue and customs service, 78,300 people were classified as "non-dom" in 2017-2018, allowing them to pay £2 billion less to the Treasury.

Another advantage of the British tax system is that capital gains tax can be offset by much lower taxes on property, even on the most expensive.

Unlike France, there is no fortune tax.

Education and financial services

Efun Chin, founder and principal of Mayfair Legal, said: "The UK has been an attractive destination to many foreigners for many years, decades and many reasons as well.

"It's due probably to historical reasons where Britain used to have an empire and many Commonwealth nationals would see the UK as the destination to study because of the quality of the institutions."

Meanwhile, anyone investing at least £2 million in the country can get a dedicated "Golden Visa" allowing them to stay for five years.

"It would definitely be a mistake to think that the only reason for a wealthy person to move to the UK would be to save some tax," said Summers, an assistant professor of law at the LSE.

He pointed to "well-established advantages for doing business", from international openness, a favourable time zone, a widely spoken language and respected legal system.

Brexit and Labour: A deterrent?

Despite the vote for Brexit in 2016 and uncertainty over the actual departure date from the European Union, Britain is still a favourite destination for the ultra-rich.

"Of course they were talking about Brexit but they have not been stopped by Brexit," said Chin.

Diplomatic tensions in 2018 between Britain and Russia, for example, can have a much more important temporary effect.

Summers observed: "its position as a gateway to the EU has also been an important factor but this status is now less certain."

In the short-term, there is the hypothetical victory at the election for Labour, which has promised to target the rich.

"If Labour says they would like to close down independent private schools, I think that would have an effect," said Chin.