As the Treasury contemplates a manifesto-breaking income tax rise one group argues that a UK Investor Visa could raise £225bn over 10 years and keep wealthy individuals, and their stamp duty receipts, in the country.
Foreign Investors for Britain (FIFB) hopes the government will start listening to it soon.
At its Investment and Growth summit at the House of Lords on Thursday, the group will make the case for a UK Investor Visa, arguing the country needs to attract and retain wealth.
At the last FIFB Parliamentary reception in July, key government officials were notable by their absence as business leaders including Martin Sorrell outlined the damage done to the UK economy by pushing wealth creators away.
MANIFESTO BREACH
With the financial pressure on the government so intense that ministers are considering a manifesto breach by raising income tax to help plug the £30 billion black hole, surely any ideological objections must begin to waver?
FIFB estimates an investor visa would raise £225 billion over a decade through a combination of a fixed annual charge of £200,000 and a minimum investment of £2.5 million over the 10 years.
“The closure of the Tier 1 Investor Visa in 2022 created a vacuum for productive foreign capital,” FIFB chief executive Leslie MacLeod-Miller said.
“At the same time, the non-dom tax changes did not find the right balance for the UK to be internationally competitive to retain and attract foreign investment.
“The Global Investor Visa is not merely a tool for attracting capital but a vital lifeline for securing Britain’s economic future amidst fierce global competition for investment”
THE NON-DOM DEPARTURE
Under the previous regime, non-doms could live in this country without paying UK tax on their overseas wealth.
New residence-based rules were introduced in April that have a four-year time limit and mean overseas assets are subject to UK inheritance tax.
As a result, a large number of non-doms have left for countries including the UAE, Switzerland and Italy, although not everyone has necessarily sold their UK property.
There is unlikely to be any Investor Visa news at the Budget because it comes under the remit of the Home Office, but FIFB hopes the billions potentially raised will make the Treasury sit up and pay attention.
The more hostile environment faced by wealthy overseas investors, which also includes increased stamp duty for additional homes, means prime property markets have slowed this year.
Prices in prime central London fell 4% in the year to October. That compares to average UK growth of 1.9%, as the Halifax reported last week.
Hundreds of millions of pounds in stamp duty have already been lost, according to recent Knight Frank estimates.
LOST STAMP DUTY
In fact, the government recently lost £2.5 million on a single deal thanks to the pre-Budget uncertainty, according to Stuart Bailey, Head of Prime Central London Sales at Knight Frank.
“We’ve lost transactions because buyers have believed some of the speculation and pulled out,” said Stuart, speaking on the latest episode of the Housing Unpacked podcast.
“One of those transactions had two and a half million pounds of stamp duty attached to it. You can imagine how many millions the government has lost as a consequence.”
Stuart also discusses which of the various tax proposals would most impact the prime central London property market, what buyers should expect in terms of future price growth and which areas of the capital are back on the radar for buyers as they look like relatively good value.
On Thursday this week the government will have a clearer idea of whether it needs to breach its manifesto promise on income tax.
If it does, it will amplify the political stakes, but the Treasury may decide it has no choice.
But, as FIFB will explain this week, there is another path for the government to go down. The question is, are they listening?
