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Britain's ultra-rich attract interest in UK election campaign
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 re-nationalise key industries, including mail delivery, energy and the railways.
Billionaire mobile phone magnate John Caudwell on Monday warned that Labour tax hikes for the top 5 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.
But just who are the ultra-rich? In May this year, The Sunday Times said there were 151 billionaires in Britain. The 1,000 richest families and individuals have a record combined wealth of £771.3 billion (S$1.38 trillion).
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 (S$39.3 billion), with Russian businessman Alisher Usmanov eighth, just in front of his compatriot Roman Ambramovich.
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.
Andrew Summers, an assistant professor in law at the London School of Economics (LSE), said: "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."
According to the revenue and customs service, 78,300 people were classified as "non-dom" in 2017-2018, allowing them to pay £2 billion (S$3.57 billion) less to the Treasury.
Another advantage of the UK 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.
Efun Chin, the founder and principal of Mayfair Legal, said that the UK has been an attractive destination to many foreigners for many decades. "It's due to historical reasons; 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," he said.
Meanwhile, anyone investing at least £2 million in the country can get a dedicated "Golden Visa", which gives them the right 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 Prof Summers.
He pointed to "well-established advantages for doing business", from international openness, a favourable time zone, a widely spoken language and respected legal system.
Despite the historic vote for Brexit in 2016 and uncertainty over the actual departure date from the European Union (EU), 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 Mr Chin.
Diplomatic tensions in 2018 between Britain and Russia, for example, can have a much more important temporary effect.
Prof 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."
Mr Chin said: "If Labour says they would like to close down independent private schools, I think that would have an effect." AFP