Visa for the ‘super rich’ won’t bring back non-doms, MPs say
The government has floated a new “investor visa” in an attempt to stop the flight of millionaires from the UK, with plans in the early stages of development.
The visa would reward those who invest heavily into the UK – particularly in strategically important areas such as AI and clean energy – with a route into the country, Bloomberg reports.
However, Conservative MPs are raising concerns that without reforms to the UK’s current tax regime, the investor visa will not achieve its objective in attracting foreign capital.
In the 2024 Autumn Budget, Chancellor Rachel Reeves announced hikes in the capital gains tax and carried interest tax, which were considered by investors as a “blow”, as they targeted returns on investment.
Shadow Chancellor Mel Stride said: “The horse has already bolted. We’ve been losing investors and talent by the day under this Labour government. And they’re not leaving because of visas.
“If investors don’t see a country which is pro-business and wealth creation, they will go elsewhere. It’s as simple as that.”
Mark Garnier, shadow economic secretary to the Treasury, told CityAM that “the principle is not a terrible thing,” but that the government should be focusing on making the UK more appealing to investors not through a visa, but through “the right sort of tax regime.”
“You want to create a better carrot,” said Garnier, rather than resorting to “gimmicks.”
Recalling the non-doms
Harriett Baldwin, shadow business minister, told CityAM that the Government’s changes to the non-domiciled tax regime have led to a millionaire leaving the country “every 45 minutes.”
The non-domiciled (non-dom) tax, which came into effect in April, requires UK residents with permanent homes outside of the UK to pay taxes on £2,000 or more of their foreign income. The tax also applies to any money non-doms bring into the UK.
The non-dom tax has been criticised for pushing away the UK’s wealthiest, as it largely applies to those who set up homes abroad for taxation reasons.
The Sunday Times’ Rich List this year saw the collective wealth of the UK’s 300 richest drop by three per cent.
The exodus of non-doms is estimated to cost the Treasury up to £12.2bn by 2030, as the average non-dom pays up to 21 times more income tax than the median earner in the UK.
For Baldwin, the potential investor visa “sounds like a panicked reaction as the Socialists suddenly realise there’s a huge hit to tax revenues which will have to be paid for by ordinary taxpayers.”
Businesses are optimistic
The business community is more bullish about the prospect of the investor visa, which has raised hopes the government is making moves to replace the UK’s diminishing number of millionaires.
Andreas Adamides, CEO of Helm, said that the proposed visa shows a “welcome recognition that the UK must maintain our competitiveness for capital and talent following recent tax reforms.”
Though Adamides suggested that “a broader approach” which focuses on a wider range of sectors “could yield even more benefits.”
“International investors often seek flexibility in their portfolios. Competing jurisdictions like Cyprus are attracting wealth with minimal restrictions and significant tax advantages.”
A mixed precedent
There are several countries which offer similar migration routes into a country, including Jamaica. In addition to the visa, Jamaica does not have capital gains taxation for individuals, which attracts investors.
Canada previously allowed individuals to migrate to Quebec through an investment of $1m to a Quebec-owned fund, as well as a financial contribution of $200,000.
Until 2022, the UK offered the Tier 1 investor visa – or the “golden visa” – for individuals with “access” to £2m. It was scrapped after 14 years due to security concerns; the government announced it “failed to deliver for the UK people and gave opportunities for corrupt elites to access the UK.”
Talks of the investor visa come after the government unveiled their proposals for immigration reform last week, which will see an increase in the influx of “high talent” workers, while making it harder for cheaper, lower-skilled labour to enter the country.
The new plan for immigration includes a ban on hiring care workers from abroad, something which the Home Office estimates will lead to an annual reduction in 7,000 main applicants for that Health and Care visa route (not including any dependants).
For the Greens, opposition to the proposed investor visa are based on qualms over a “two tier” system, wherein individuals can “buy” their way into the country. Co-leader Carla Denyer said: “If you want to come here to work in a care home looking after sick or elderly people, tough. But the super-rich can come and go as they please.”