According to new analysis conducted by Knight Frank, prime home sales have dropped significantly in the lead up ti the Budget, with non-doms weighing up their options.
Offers on UK properties above £5m fell by 18% in the year to September, whilst holes sales over £2m fell by only 5% over the same period.
Knight Frank highlights that stamp duty on sales above £2m accounted for 22% of the £11.7bn raised in 2023.
Tom Bill, head of UK residential research at Knight Frank, says the government’s tax treatment of the country’s 74,000 non-doms is “one reason for the recent hesitancy in super-prime property markets”.
Labour have committed to lifting the stamp duty surcharge paid by non-doms by 1%, which will raise an estimated £40m over the next five years. This is two percentage points higher than the rates currently applied to residents in the UK.
Bill added: “A four-month delay between the election and the Budget has given the government time to consider the ramifications of its original plan for non-doms.”
In March, the then Conservative chancellor Jeremy Hunt announced that the non-dom tax regime would be phased out.
This meant that from April 2025, anyone moving to the UK would not have to pay tax on money they earned overseas for the first four years. Once this period ended, and if you remained in the UK, they would pay the same tax as other UK resident.
They would be given a two-year transition period, during which they would be encouraged to transfer their foreign wealth into the UK system. Hunt estimated that this would raise £2.7bn a year by 2028-29.
Labour’s plan intended to go further by removing a 50% discount for non-doms who transferred foreign in come into the UK in the first year of the new rules. Any foreign assets held in a trust within the UK inheritance tax framework would also have to be included in this.
In March, the then Conservative chancellor Jeremy Hunt announced that the non-dom tax regime would be phased out.
Lobby group Foreign Investors for Britain has petitioned Labour to increase its proposals by introducing a tiered tax regime for non-UK residents. This would require individuals to pay an annual amount based on their net worth, which would give them more tax protection, including inheritance tax, on income from overseas.
The report refers to a survey by Oxford Economics, which stated that if the proposals passed into law, 98% of non-doms would quicken their emigration plans. If a tiered tax regime was introduced, this would fall to only 13%.