In recent months, a lot of political noise has been made about the UK’s favourable tax regime for certain non-UK domiciled individuals, such as Akshata Murty aka Mrs Rishi Sunak, and the possibility that, if elected, the Labour Party is likely to abolish it.
The change in policy would be the political equivalent of picking low-hanging fruit – not many in the country will object to a minuscule percentage of the population paying millions more a year in tax.
Wes Streeting, the Shadow Secretary of State for Health and Social Care, spoke on 13 November 2023 on Radio 4, saying that Labour will fund 2 million more NHS appointments by ending the non-domiciled (non-dom) regime.
Labour has previously referred to a report published by Warwick University in September 2022, which concluded that abolishing the regime (or, more precisely, the remittance basis of taxation that may apply to Non-Doms living in the UK) would raise an additional £3.2bn for the government in income tax and capital gains tax. To put it mildly, that is not a trivial amount of money (although tax professionals think the actual receipts would be closer to £1bn).
Labour leader, Sir Keir Starmer’s proposition to eliminate the non-dom rules rests on the presumption that these High Net Worth Individuals (HNWIs) will remain in the UK following rule changes, rather than move somewhere with a more favourable fiscal environment.
There are risks baked into his assumption, as the super-wealthy, with residential options spanning the globe, may vote with their feet. Although Portugal and Italy are often mentioned as the most alluring alternatives, Jersey is well-placed to benefit from any exodus of HNWIs from the UK.
Why is Jersey a good home for HNWIs, and why are they, in turn, good for Jersey?
Jersey has pitched for the super-wealthy to move here for some time. It positions itself as a more hospitable destination for those inclined to keep their wealth.
The Island offers a special tax rate for HNWIs – 20% on the first £1,250,000 of worldwide income and 1% after that. For a wealthy financier who counts their bonus in millions, coming to Jersey rather than staying in the UK could save them from paying away close to half their earnings.
The Island’s High-Value Residency (HRV) programme has created a transparent and progressive pathway for potential residents -but the programme is not about just pandering to the super-wealthy. In fact, its purpose is quite the opposite; the super-wealthy must be able clearly to demonstrate how they will significantly benefit Jersey by coming here.
In addition to the substantial annual tax contribution paid by new arrivals, they must acquire houses in Jersey for more than £3,500,000 (or an apartment worth more than £1,750,000).
This threshold does not stop locals from accessing most housing; rather, it fuels our construction and estate agent industries. It also supercharges stamp duty receipts. Since Jersey was forced by international tax regulation to move away from taxing SPV companies based here and towards taxing individuals, the strategy of enticing super wealth has become a key item in Jersey’s budgetary toolkit.
Jersey does not only consider the fiscal benefits of enticing HNWIs to come to Jersey. All candidates who request residences are vetted for how they can contribute to the Island’s social, cultural, and economic development. Jersey wants to leverage these individuals’ networks, entrepreneurial skills, leadership skills and business acumen, not just take their sterling.
Jersey’s residency programme transcends mere financial considerations and aims to build a mutually beneficial relationship between the individual and the community.
There are many examples of HNWIs who have moved to Jersey and contributed to the Island’s cultural, business, and intellectual firepower. To name a couple:
- Simon Justin Nixon: the co-founder of and former deputy chairman of Moneysupermarket.com, is estimated to be worth £1.8 billion. He constructed one of the Island’s premier private residences above St Brelade’s Bay, engaging local contractors and professional advisers.
- Tony Buckingham: the former special forces soldier purchased a landmark waterfront property and is the chief executive officer of Heritage Oil. He is active in the business community in Jersey.
Jersey’s foresight in establishing an attractive environment for HNWIs should offer it a strategic advantage. It has positioned itself as a practical, appealing and desirable alternative for those who may find a centre-left environment less welcoming, but don’t feel ready to embrace a new life more than one hour’s flight away from the UK.
The takeaway is that these individuals are very welcome in Jersey, and the Island is careful to ensure we have them living here.
Finally, the expected arrival of a Labour Government may encourage the view that it is time to part company with the UK, without having to leave the British Isles.
Prior to joining Viberts, Oliver worked at Ogier and Pinel Advocates. Oliver has over 10 years’ experience dealing with a range of corporate, regulatory, funds and private client matters in Jersey.