UK's ultra-rich non-doms urge Italian-style tax regime to prevent wealth exodus

LONDON — Britain's ultra-rich non-doms are urging the government to introduce an Italian-style flat-tax regime to prevent a wealth exodus, as their preferential status comes under threat in the upcoming budget.

Foreign Investors for Britain, a lobby group comprised of non-doms and their advisers, alongside think tank Oxford Economics have proposed a tiered tax regime (TTR) that would charge wealthy foreigners a single annual fee in exchange for exemption from inheritance tax (IHT) on non-UK assets and U.K. tax on overseas income and gains for up to 15 years.

Such fees would be levied according to an individual's net wealth, with proposed annual charges ranging from £200,000 ($260,447) for those worth up to £100 million, and an annual charge of £2 million for those worth over £500 million. That differs from Italy's regime, which charges a recently doubled rate of 200,000 euros per year regardless of wealth bracket.

Foreign Investors for Britain is set to meet with government officials on Thursday to discuss the proposals.

"If there's no stability, people are making plans now to leave," Leslie MacLeod Miller, chief executive of Foreign Investors for Britain, told CNBC on Wednesday during an event to announce the proposals.

The U.K.'s non-dom status is a colonial-era tax rule, which permits people living in the U.K. but who are domiciled elsewhere to avoid paying tax on income and capital gains earnings from overseas for up to 15 years. As of 2023, an estimated 74,000 people enjoyed the status, up from 68,900 the previous year.

While the regime has long been politically contentious, it had come under pressure over recent months, after the Labour Party in August announced plans to step up the planned abolition of non-dom status by