The UK’s £4bn Non-Dom Hit

Hello and welcome to Housing Unpacked, Night Frank's podcast about one of the UK's favorite topics of conversation, the residential property market course. I am your host Tom Bill. Now buyers, sellers, and anyone involved in the housing market has had plenty to digest already, so far this year, mortgage rates have been rising as the Middle East conflict has pushed energy costs higher, which has taken some of the edge off demand, particularly the more discretionary higher end of the market. Meanwhile, we have a new Prime Minister who is still getting his feet under the desk, after making several spending pledges in these early weeks of his premiership. What we don't know yet is how Andy Burnham and his Councillor John Healey are going to pay for all of their plans. In fact, we probably do have quite a good idea, actually, because there aren't that many alternative. The bond market is not going to allow our spending spree, layer-back benches, won't sanction meaningful spending cuts, and the party is bound by a manifesto commitment, not to raise income tax, VAT or national insurance, which might have been an unfortunate pledge to have made in hindsight. So what it's left with is a series of smaller taxes on wealth and assets to fund its plan, but these of course come with all sorts of unexpected consequences. Look at the non-doms who have left in recent years and taken their tax revenue with them. So what might we expect to see if there are even more wealth taxes materialising in the UK as seems likely? What sort of considerations do wealth the individuals weigh up when they are deciding what to do next and how damaging and counterproductive could these taxes prove to be? Who better to answer all of these questions than James Corby, who is a founding partner of the private wealth team at law firm Stevenson Harwood. James Advise is on a range of UK and international tax issues, including residency and domicile, benches, trusts, succession planning and HMRC disputes. He's also a regular media commentator and is recognised across the private wealth sector for his expertise, having been included in E-Private Clients 50 Most Influential List for 10 Successive Years and was named Tax and Trusts Lawyer of the Year at the 2022 Spears Wealth Management Awards. He's also Founder and Chair of the Centurion's Private Wealth Forum, a global network of senior private wealth and vises and thought leaders. So I'm hoping James can give us a really good sense of what affects decision-making among wealthy individuals, not just in relation to property, and that of course will hopefully give us a good steer of what we can expect on the other side of this autumn's budget. James, welcome to Housing Unpacked. Nice to be here. Thank you, Tom. Lovely to have you. Well, anybody who reads your LinkedIn posts, I'm sure a lot of people do know that you can't really be accused of sitting on the fence, which I hope you won't do today either. We're one month into the Andy Burnham premiership more or less. Now, would you say you become calmer on social media or more animated in recent weeks? I'm always calmed, Tom. I'm firm but calm, robust and unemotional. I think one of the things though that has got my interest is we have a new Prime Minister who in the past has made noises about wealth taxes, and consequently there's been a lot of pressure from the usual suspects on the left to push Burnham into jumping over the edge. And you can't blame the left for doing that. There's a new Prime Minister going, they're going to try their luck. They tried to push Stammer and reaves into that and they declined to do so. And so maybe they think the Burnham is more willing to jump into the void of wealth taxes. And to preempt your next question, is he going to jump? I think it would display a remarkable lack of fear if he did that because the behavioral response of a wealth tax would be immediate and massive. Yes. And I think this is what scares most policymakers when it comes to the wealth taxes is that the philosophy behind wealth taxes is just so deliciously socialist and makes you feel all warm and lovely inside. But as soon as it hits reality, it starts to unfold at a very, very fast pace. So I don't think it's going to happen. No, well, there are lots of ifs and buts. And we'll certainly come back to that in a moment as to that void that you said he'll be jumping into and what could happen. And who would you say are your clients now? What's the typical profile, you know, wealth levels where they come from, business sectors that they operate in? It's all entrepreneurs, quite a lot of property investors, Asians and Middle Eastern people, they love property, particularly property in what they see as stable jurisdictions. I'm not sure if the UK still counts. What I was going to say, we can reach. Come on to the best description of that. Let's pretend for a moment that it does. So yeah, lots of property investors, lots of South Africans, probably my largest single nationality of client is South African for all sorts of bizarre reasons. But it doesn't really matter where they come from, 90% of my clients are foreigners. So obviously I had a lot of non-doms and a lot of left, despite what the Guardian and others will tell you that no one's left. And what's even worse is that they're not being replaced. So that's the client base. You know, I am a tax lawyer, I'm a tax geek. I enjoy the topic and I enjoy problem solving. So and a lot of it is just getting clients to understand what the tax line rate is actually are because we've got a ludicrously complicated tax system as you know, Tom. You've got no hope, frankly. I've seen some of your posts with piles and piles of tax law books. Yeah, we have the longest tax code in the world. And as a layperson, you've got no hope. The only hope you've got is to remain a wage slave and for your employer to deduct all the tax that's due and you hope to God, nothing goes wrong. Anyone else who's running a business or got part-time jobs or self-employed, you've got no hope understanding it. I mean, in terms of the UK and how it has been viewed, perhaps we'll come onto how it is currently viewed. Yeah, most of your career, I mean, it's fair to say it's been viewed relatively favorably around the world and what kind of decisions that have been taken over the years you think has made the UK attractive to people looking in from the outside. There are a couple of things which I think have been very important. Firstly, the ease of incorporation in many of our European neighbors just to get a company incorporated is a remarkable journey of bureaucracy and putting together affidavits and business plans and God knows what. I mean, it is almost like someone's designed the system to prevent people from setting up companies. Yeah. It was in the UK. It's got a little bit trickier recently because of various changes in anti-money laundering laws, but you should be able to set up a company in 20 minutes. So the UK's had a reputation of being an easy place to your business. Now, we've been overtaken by Hong Kong and Singapore and all sorts of other places now because they've been copying what we have done and they're doing it better than us. The second thing has been tax. There have been some aberrations, so let's just ignore everything that happened between 1972 and 1982. Historically, the tax burden has been on the lower end versus the European mainland. Now, that's changed. We're getting there up with Italy and France and all that, but I also believe that we've had the non-dom system forever. For as long as we've had whatever a domicile is or for tax purposes, the non-doms have not been taxed and it's been a safe haven for foreigners to come. Yes, and they invest in simple terms. What was a non-dom and what benefits do they enjoy? So the non-dom in its simplest was that if you were not born in the UK and you're not a UK citizen, then you could arrive in the UK and you'd be free from tax on your foreign income and your foreign gains. That's incredibly attractive. Still paying tax in the UK, but not on the market. You pay your tax on your UK source income and gains and you'd pay tax on what you brought into the UK, which I've always felt a little bit weird because people would bring money into the UK to either spend it or invest it. The weirdness of the non-dom system was this disincentive to bring money in. Now, the conservative government some time ago ameliorated that by bringing in something called business investment relief, which is one of the few sensible things that government did and that enabled you to be exempted from the remittance charge on bringing money in if you were putting into a trading business. That was a decent compromise, if you like. That's where we were, and then of course it all got blown away in 2024, starting with Jeremy Hunt's last budget, and then Rachel Rees picking up the baton and then smashing the baton to pieces and bringing in what ended up being the non-dom abolition rules in 2025. That's where we are. The other thing is the removal of the investor visa, which happened at roughly the time of the invasion of Ukraine by Russia. All of those things together has changed the weather here in the UK and how we are regarded by the rest of the world. It is no longer seen as quite an attractive place to come and live and a lesser attractive place to invest. Stats have shown that this came out of the, I think it was the Harrington Review, which Hunt commissioned, you're 90% more likely to invest in a country in which you are living. So wealthy non-doms over here, you know, like Egyptian, billionaires and all that sort of stuff, they were 90% more likely to invest in the UK because they're here than if they were sitting in their home country or somewhere else. And there's a crisis in FDI for undirect investments. That is, it's fallen off a cliff, which is why the Harrington Review was commissioned in the first place. How can we get people investing? Because without investment, you don't have jobs. Without jobs, you have no tax and without any tax. You have no public services. Just going back to that sort of slip that you said that you UK underwent. Looking around the world at, you know, other comparable destinations. Where was the UK? How far did it slip? Did it, has it sort of gone top of the table? You know, top five to top 20 or where would you assess it to be now? Because tax systems are so complicated, we've got consumption taxes, you know, we've got direct taxes and indirect taxes, we've got basically taxes on everything, you know, we've got now got taxes on the flights that you take, got taxes on insurance premiums. They'll be taxing bids and windows next, right? Let's not give them any ideas. They have done both in the past. So tax as a percentage of GDP is probably your best measure. And where we were at, which is like mid 30s percent, we've gone way beyond that now. I forget where we are, but I mean, we are, we're not as bad as France, but then no one is, but we're catching up. And this is the real problem when one looks at it as an economist, if you're getting to the stage with nearly half of your gross domestic products is represented by tax, it shows that the state is getting too big and you end up relying on fewer and fewer taxpayers. Now, the tax base in the UK is so narrow for income tax, it is an embarrassment. So the top 1% brings in 29% of income tax and yet the top 1% only actually earn 13% of income. So it's a disproportionate share. The top 10% bringing 60% of the income tax. I like to flip those numbers around and say, well, what that means is that 90% of the country is only bringing in 40% of the income. And this is the problem for policy makers. If you rely on an ever diminishing band of tax payers, all of them wealthy for your income tax, and by their mind, CGT just comes from 4% of taxpayers. And most of the CGT, like more than 60% comes from like 2,000 people per annum. So we're talking about a very small number of people with choices. And the reason rises in CGT never really work is that if CGT goes up, you just don't sell. It's like stamp duty, right? If stamp duty gets too high, which it is because the top right now is 19%, you just don't buy it. But I think that people working inside the Treasury know that. The political imperative that's been there hasn't just been the UK where wealth taxes have been on the rise. It seems across the world, wealth, as you say, it's mobile. It's moving cross borders in ways that it didn't perhaps 20 or 30 years ago and governments want to control that flow. And it's understandable, I suppose, in a way that they do. I mean, it's not just the UK, is it really where this has been happening? Have you seen this elsewhere? Yeah. I mean, it's happening in Western countries. And why do you think it is? I mean, it is still the post-global financial crisis, backlash. Is that what's going on? Well, we're into the realm as a philosophy now. But yes, I would say so because I think there are global financial crisis. People blamed rich people, specifically the banking system and all of those complicated arrangements that are going on. And there was a desire to punish the rich. I think that's what's been happening ever since when you look at tax policy across the world. I mean, you look at what's going on in the states as well. There is this popular feeling that politicians feel they need to respond to. And there's also, I think, a really curious misunderstanding of what the way economics works. And you know, you kind of name checks my LinkedIn profile. I'm probably the most prominent tax lover and the whole of LinkedIn anywhere in the world. So I get to see a lot of comments. And this kind of comment I'm just going to say right now is common, commonly held. It is, we shouldn't have any billionaires because the billionaires are taking money away from us. Most people do not understand economics. They think economics is a zero sum game. If he's got a lot, he must have taken it from us. They don't understand the concept of economic growth. I mean, you can sort of see the thought process behind it. You can understand the thought process behind it. And perhaps it was something that people at a certain point in their life, they sort of think that way. And people perhaps don't necessarily follow economics and politics as closely. And it's sort of something that's happening over there. And they want perhaps easy solutions or understandable solutions. But actually, what you're saying and laying out is that these things, it's not as simple as these often made out. It's very complicated. And most people want a simple philosophical answer to something. And so someone once said to me on LinkedIn, he was complaining about Elon Musk. And by the way, I'm not a defender of Elon Musk. I don't act for him. I've never met him. But the thread was, well, he became a billionaire by taking money from other people. I say, well, what do you think he did? Did he go around and rob load of people's houses? You know, he's created amazing businesses out of nowhere. He's increased the national wealth of the United States, which is something the US is actually quite good at, because the US has been, as you know, has been growing so much faster than the UK. You know, it's growing up 4, 5, 6% a year, whereas we were barely breathing. So people just don't understand economic growth. And they don't understand what fuels it. They seem to think that we can grow by just taxing people a lot and employing more civil servants and spending more. Now, sensible economists realize that doesn't work. But that's the narrative that we are working against. And why we have these obstructive taxes on wealth and politicians have got themselves into a bind now, because as soon as someone recommends that we reduce the tax that can benefit wealthy people, it's the guardian's going to be front-plaged tax cuts for billionaires. That's the political system we're dealing with at the moment, which is a lack of common sense and a lack of, I don't know, courage to do something interesting. Yes, well, politicians probably afraid, as you say, afraid of the headlines. We're almost two decades on now from the GFC. Are there signs? Do you think we're moving beyond that? Is the debate still raging? Or we have famously Gary Stevenson, who I'm sure many listeners have heard of, a part of a group called Patriotic Millionaire, who have Gary Linnett, because saying he'd be happy to pay more tax, which I think he probably could do if he wanted to. The debate feels like it's still very, very live. Yeah, we're going nowhere at the moment. Sometimes people just need to learn the lessons again, so maybe we need to go back to the 70s and have 97% tax rates and IMF bailouts, so that we can purge the system and then start again. Coming from the Resid property market angle, we've had A-Ted, we've had stamp duty hikes in recent years. That's been driving down prices and transaction numbers, for example, in prime parts of London, by around the quarter, over the last decade or so. When you're dealing with someone from overseas, you're talking them through buying a UK property. I mean, is it a shock? Is it a steep learning curve for them still? Maybe, but I think clients are sophisticated enough to realise that. I mean, it's not easy buying property in France or Spain or these other countries. I don't know if you ever tried buying a thing in Greece. Good luck to you if you are. So I think every country's got its peculiarities on buying real estate. Countries are very protective about their real estate and who buys it and all of the forms you have to fill in and permissions. So I don't think clients are surprised it's awkward and I don't think they really care too much because their lawyers will take care of that. What they're interested in is what's the bottom line? Is it a decent investment? Well, the answer's no at the moment because prime central is a depressing segment of the market. So why spend 25 million on something that might only be worth 17 million in a few years' time? Much easier to buy something 25 million on the rising markets, I think I can sell it for 30 and therefore I can swallow the stamp duty. So back to stamp duty, is it the UK's worst tax? If it isn't, it's in the top two. Along with, I must ask it. Well, obviously inheritance tax. When stamp duties too high, particularly in a market which is not rising, clients will just not wear it and that's why you've seen transaction volumes drop tremendously in that segment of the market because, oh, there's a bargain at this house, in Hampstead was 14 and now it's only 10. So that's great but here's a stamp duty bill for a million quid and of course it's gone up and up and it was done so deliberately by George Osborne as a deal with the coalition partners because Lib Dems wanted to mention tax. It's funny how things go around in circles, right? And on what Osborne says, well, we're not going to have a mention tax but I'll tell you what, I'll yank up stamp duty and it's like an advanced mention tax and you'll get it sooner and we can cash the money and spend it. So that's where we are with stamp duty. It was put in for purely political reasons. It's become quite punitive, hasn't it? Yeah. Even on low value properties like low value, you see with like the angel arena issue, right? She bought 800,000 pounds property and she ended up with a second home search charge of 40,000 pounds. 40,000, that's just the search charge is not even the primary charging provision. So that's a lot of stamp duty and what stamp duty does is it stops people moving. It hinders economic growth because if you're going to move from one region to another in the UK, particularly a more expensive region because that's where you want to live and work, but you have to pay 120 grand of stamp duty. Do you not going to do it? And of course, everyone loses out in a value chain for that because this state agent loses out the lawyers, the painters and decorators, the designers, and the government loses out because they get no stamp duty. So rather than having a reasonable amount of stamp duty and just saying, like, you know what, let's have a top rate of 4% on everything, which is where I would go. They get 12% of nothing. So you want 4% of something or 12% of nothing. I know what I would take every single time, but that's where we are on stamp. If they weren't coming to the UK, will they still buying or will they buying perhaps, you know, mainland Europe or Dubai? Well, if you people bless them and quite predictable. So they'll be buying in the kind of places that you would expect. I mean, Switzerland's always been popular. I mean, it shows you that bureaucracy will not stop people from buying property. It is difficult in Switzerland, but if you spend 20 million in a shallow in clusters, it's likely to hold its value. And you know what? It's a lot easier to rent than to buy. If you're not sure, and that's the thing you need to bear in mind, if you're spending 12 million in a property, you're looking at a million pounds of stamp, my advice to clients, if you're not sure about buying, just rent. You can rent quite a juicy property in Kensington for what seems like a lot of money to you and me, but compared to an upfront payment of stamp duty for the winning quid, you know, why not just see how you feel about London and then see what you want to do? Well, it's what happened before is people were jumping in two feet first. And so, oh, I might want to live in London. I'll go and buy in Kensington because the market's rising. It's not too difficult to do. There's no restriction on foreigners buying. And that pressure, I suppose, has, well, it has. It's increased since the London regime was finished last year. I just wanted to ask actually around the sorts of conversations you're having and that you had at the time with London. I mean, how much of it was, obviously, a lot of it is tax, but is it, is there an also an element that people just wanting to feel welcome? Is there a more than an emotional side, you think, than people appreciate? I mean, non-dobs aren't automatons. They're not walking calculators. There's a bundle of emotions involved. And it's never just tax, right? It's never just tax. Tax can push them over the edge, but it's always a bundle of things. So what kind of issues do you think the, you know, you spoke and do you commonly hear from these people? Firstly, we don't feel welcome anymore, because we're tied with a tirade of negative news about non-doms and how we're sponges and we don't pay our fair share and all that. I mean, people just get fed up with that. When you've got a client whose income tax bill is over a million pounds a year, being told by the public that you don't pay your fair share feels it stinks. So no matter how much tax they pay, it's just never enough. So there's that culmination of bad press, which hasn't effect. Then there's this herd mentality that all humans have. And it's very much an economics field as well, which is herd behavior. Where is the herd going? And we see that in terms of bubbles on asset prices and all sorts of things, but we've also seen it on residency. That as soon as people start to move somewhere else and it's people that you know, you start to think about it as well. And something that was not even on your list of options is suddenly on there. And as soon as you start thinking about moving, the chances of you moving obviously is exponentially higher. And then all you're waiting for really subconsciously is something to push you over the edge. And the thing that pushed people over the edge in terms of non-doms is really quite simple to sum up. It's back to inheritance tax. My clients could have lived with the income and gains tax issues. The failure to grandfather offshore trust that was some in some cases sent up, so up 20, 30 years ago. Failure to grandfather those that is protect them from IHT. And so changes came in. It was the final straw. So all my wealthiest clients just say, well, this is unacceptable. I am off. And it's this breaking of trust because just for those people that are not experts on IHT and you're forgiven if you're not, the way it worked is if you're non-dom and you create an offshore trust, which holds off non-UK property, then that becomes exclusive property, therefore, exempt from IHT, regardless of what happens later. So even if you became UK domicile later. And that was in the law. So it wasn't just like customer practice. That was actually written into the 1984 inheritance tax act. So basically what the government is saying, you can come here. You can, as long as you set up this trust, washer non-domicile, it doesn't matter what happens later. We'll always make sure it's outside the scope. Now, you can argue philosophically whether that's fair or not and all that nonsense, right? But there's a clear bargain here, which has come to UK. And if you set up these trusts, they're protected. And that's always the way inheritance that's worked. So whenever we had changes to inheritance tax, which we've had plenty, they've always been grandfathered. So we had some big changes in 2006, which I'll not bore you with. But if you had a pre-2006 trust, then it was not affected by the changes. So that's yeah. And this is what the industry was sort of screaming at. Yes. Rachel Reeves effectively wasn't it, to sort of have this carve out. It's a sort of, it's a bit of a footnote, it's a bit of a detail in not necessarily, you know, gather or create lots of sort of negative screaming headlines. But that didn't happen. It didn't happen. And we all, because we had these engagement sessions, right, when they became in, no, actually before they became in. And then when they were elected, where we're invited to various HMRC offices. Now I didn't go about some colleagues went. And what all the advisors were saying is you need to grandfather trust otherwise the clients will leave. I mean, that's the message that we gave to a HMRC. And the HMRC offices that were at these engagement sessions were receptive to that message. But of course, it goes back to a minister because HMRC officials don't make a policy. They just advise, right? So they go back to the minister and say, well, this is a result of the engagement stuff. And what Rachel really is going to say is, well, I don't care. We said we were going to do this. And this is what we're going to do. We're not going to let the facts get in the way of a good story. So they ended up doing exactly what we want them not to do. And what happened afterwards was exactly what we want them to happen, which is lots and lots of non-doms leave. Yeah. So it was like a finesse wasn't there. It seemed to be, well, the early days of the labor government, I think overall, perhaps around when it went to fuel or the farmers and there seemed to be what they were doing. You could sort of see where they were coming from, but it wasn't done in a particularly finesse or considered way and things. But they needed to be done for political reasons, sort of quickly. As you say, then non-doms did exactly what was expected to happen. And I suppose you had lots of conversations and about, right, how do we, you know, where, where alternatives can we go? And how would you assess, there's been lots of numbers bandied around, not always easy to get a handle on what happened in terms of what you've seen and heard. I mean, what would be your assessment in terms of putting a percentage figure on those non-doms who did leave the country? Well, the OBR estimated that with the revised non-dom abolition, which without the grandfather in them, that's the stuff that perhaps 20 to 30 percent of non-doms would leave. I think that's broadly accurate. But what I've said to people in the press before is it's about which 20 to 30 percent leave. Because the last set of numbers we had while was still measuring non-doms, I think we had about 78,000 non-doms. Now, most of those are not interesting. I have to say, from a fiscal perspective, because, you know, if your Polish plumber has come over to the UK, you could be a non-dom. But it doesn't mean that you are paying a lot of income tax or capital gains tax. If the world is non-dom, leave. And going back to the income distribution for ordinary people, like, you know, not non-doms, that I mentioned before, the top one percent, paying 29 percent, the top 10 percent, paying 60 percent. I'm not saying that within the non-dom community, the distribution is as stark as that, but it will be similar. It always is, right? So, if your wealthiest 20 percent of non-doms leave, then you can expect 60, 50, 60, 70 percent of the 13 billion that they brought in to go with it. Now, I've done no maths on this as much as I've been able to. And I came up with a figure of a loss to the revenue of about four billion a year as a consequence of the departures and various associated behaviors. Adam Smith instituted a study about a year ago on this and came up with a figure of about two billion. And I think there's another one out there somewhere. So it's been arranged somewhere between one and four billion, I would say, lost per annum. And bearing in mind that the government brought in this policy, promising it will bring in three billion. I mean, in my eyes, I said, it will bring in three trillion because it's a made up number. And it was not based on any reliable data. What they did is they relied on an incomplete and self-serving study from Warwick University, which doesn't really bear much scrutiny. But that figure of three billion was adopted by Labour and just parroted, right? We're going to spend it on nurses and breakfast clubs. And I think they spent about 20 times over. But it will bring in a loss. I don't think there's anyone that actually believes this will bring in money. And then you're going to then ask the question, why are you bringing in harmful tax policies, the bringing no money? If you're going to create some pain, at least be able to show there's some gain. So a classic example of that, pain, put two or three percent on the basic rate of income tax. That's going to cause a lot of pain, but you'll get a lot of gain from that. I've abolishing non-dom. A lot of pain, no gain. Sadly, that message, as you say, gets lost between someone between the civil servant and the minister. That message gets lost when politics obviously come into play. What's kind of considerations you think people are weighing up today and how on the fence do you think a number of people still are and are you having conversations with people that are at that tipping point and what could we see tip them over the edge, for example, for example, in the budget? I think CGT going up would be on my list. That's being equalized with rates of income tax. That's one of the plans, I think, isn't it? There's been talked about whether it's seriously being considered because obviously it'd be a monumentally stupid thing to do. For listeners that don't know how it works. If you're producing a budget, the old days, it would happen on the kitchen table at number 11, right? You get together and the whole thing was a secret and then on budget day, it was all announced. these days, there's ping pong between number 11 treasury and the OBR and they have to cost everything out. So if in the proposed budget, we're going to equalize CGT rates and it's going to bring in an extra five billion or whatever fantasy number they come up with, the OBR is going to say, no, it's not going to do that because we've already told you, we told the last occupant of number 11, because of behavioral changes, behavioral responses, sorry, if you put the rates up, people will just stop selling and you'll bring in less. So we're sending that bit out. I think there's a sense in there that it's already at its optimal revenue raising point. Yeah, we're at Laffer Curve territory or the apex. I think if it goes up anything more, it won't bring in anymore. So the CGT thing is a bit of a diversion really. You can't put inheritance tax up anymore because they've gone to places they should never have gone. So pensions are going to be here and businesses and farms. I mean, that was a disaster. Non dollars done. There's going to be nothing else on that. They feel that that problem has been solved. IHT's been solved, as far as they're concerned. I bought it in on pensions and we bought it in on farmers and businesses because the IFS told us that was a good thing to do. So I don't think we've seen movement on that. CGT, they'd like to do something on, but the OBR is going to knock it back. So the main taxes on capital, I've already just dismissed. What else have we got? You can't possibly put up stamp duty anymore. They can't put VAT up and they can't put income tax rates up. I just want to emphasise the word rates. There's nothing to stop them from introducing new lower rates in between us, right? Because the moment we go up in chunks, every zero, 20, 40, 45, nothing to stop them bringing in a 15% rate or a 25% rate. And there's nothing to stop them playing around with thresholds because 45% rate comes in at 125,000. And if you want to look to how the future may turn out to be, have a look over the border in Scotland where they've got about a dozen rates and the highest rate kicks in really low. So the 45 p rate starts at around about 70, 80,000 I forget. They can do that within the manifesto, but this government is not shy of breaking manifesto commitments. Let's not forget that income tax rates have gone up by 2% for investment income, including rents. So we have a top grade 40, that's a direct manifesto breach. It would be slightly more blatant, I suppose, if they were to introduce new bands. I mean, do you think there's political will or scope to do that? I mean, they presumably must be aware that there would be quite a bit of blowback politically. There would be, but again, you want to get some gain from your pain. There's nothing to stop them bringing in a starter rate of income tax at 10%, and starting that at 7,500. Do you think they'll go for something on the income tax politically, just sort of your reading of the politics? Yes, I do. I think they have to. My own guess is that they'll start lowering the thresholds. You can have fiscal drag on steroids, which is that you drag the thresholds down. That is not increasing the rate of income tax, right? So you could bring the personal allowance down. Bear in mind, there's precedent for this, right? The personal allowance for capital gains tax has been cut into a quarter of where it was. Or is it a third? I forget. We're down to £3,000, right? It used to be 12 something. So why not cut the personal allowance? Yes, that's going to hit lower paid people, but there is an intellectual argument that people have filled. They have more stake in society of at least paying some tax, rather than nothing. If they want to bring in more tax, they're going to have to hit income tax somehow, because that's the motor. We could see a few crunch points, this autumn then, according to your view of things, if we do get this stand up between the front bench and the back bench of the Labour Party, if they do start to fiddle with the income tax ban, that's kind of slightly bolder than certainly the previous administration was. There's been talk, hasn't there? You mentioned the semester of ease at the end of 2022. Conversations have taken place about a new investor of ease. They don't have to attract capital in the government, obviously seeing people leaving that you've spoken about. You've been involved to some extent in those discussions. What's your latest readers to the appetite in the government to introduce something like that? Yes, I have been involved with several meetings at Parliament and I'm involved with foreign investors for Britain who have been pushing an investment visa and a tax deal to go with it. My own assessment of that is that I think that we will get an investment visa, because I think the government's getting desperate. I don't think they'll swallow the tax deal with it, because the tax deal that we were proposing, which is an Italian style payment of a fee, so totally undermines the whole, it's not fair that rich foreigners don't pay tax argument. They've got them into government in the first place. They think that I don't think they'll wear it. I think we'll end up with an investment visa. I don't think it's going to move the dal much, because the fig regime, which is this four-year regime that's replaced the old non-dom regime, does not encourage long-term residency or investment, because four years, you know, you think about it. So what could a new investor be to look like then is a very brief term as we sketch out? Well, what we were looking at is a minimum of 2.5 million investment into UK industry. So it would be more activist than the previous investment visa, where you could just shove 2 million into UK treasuries or deposit it with a bank. It would need to go into VCT style, kind of aim investments, that kind of stuff. And with it, it would give you permission to stay for a set period. Is there a sense Labour would sort of be a bit more controlling in terms of where they want the investment to be made? And is it going to be? Might we end up with a kind of a Labour version of an investor visa? It's entirely possible they want it rooted through the British business bank or whatever it's called. They'll be called it bureaucracy involved, but it would be an interesting opening of the door. Mone-filling is the investment visa will not be as popular as they think it might be without a tax deal to go with it. But you've got to start somewhere, right? You've got to get some wins somewhere. At present, it's almost impossible to get into the country as an investor. You can come under like employment visas and student visas. You know, we've got the weirdness now where you know investors that come over have to register for a student course. You know, it's just nuts. So we need something and something's better than nothing. So we can persuade them to give us an investment visa to at least get some people coming into the country that will be great. At some point, a tax deal, but I just feel that this government's got too many other things it needs to do. It won't have the time to think about this. And I don't think we'll see an Italian style deal, but you wanted some good news. There's somewhere in the background somewhere. There's an investor. Someone's working on this idea of an investor visa in Why Hall, whether we see the light that it sees the light today soon. That's a question. They are. They are working on it because we've had questions back from them, which have been answered. But also the Conservatives are very interested. And we've been talking to Andrew Griffiths, who's the shadow trade secretary. And we know the reformer interested in it. So when you look at the right block, if you call it right, of Conservative reform, it's highly likely by the time we go into the next government that they will be shooting for the same idea, or variations, same idea, which is an annual fee and a visa to go with it. That will start to change the political weather because you've then got a block of parties wanting that and telling the story in the process why that's good versus an incumbent government that needs money. So the good news is, I think if you hang on, because I don't have any, I'm sorry, I have no faith in this government doing anything sensible. But is there likely to be a government post the next election, whether that is 2829 with a pro business agenda that will bring wealthy people in and with a tax deal and to start to change the weather. And also the Tories remember, have promised to abolish stamp duty. That will light a bonfire under the housing market, as you know. So it could get a lot better or it could get a lot worse. It depends on who's elected next time and what their policies are. And I don't hold a candle for any of the parties, by the way. So I'm not saying the Conservatives will cure all their diseases. We need a government that is pro business. And I don't really care the color of the government. At the moment, when a doom loop of higher taxes, lower growth, higher taxes, even lower growth and employment going up, that is only ending one way. And it's a very bad way. We need a government to come in and say, you know what, we're going to be brave. We're going to cut taxes on business and we are going to allow business to breathe. If we get that, I don't get who does it, then we'll start to motor again as an economy. Very, very final question then. I mean, you mentioned the fact people are the political weather might change. Are people sort of looking through currently the next two or three years and seeing the things? Yeah, they're waiting. They will wait. I think those that haven't gone will wait to see what happens. So we have to live in hope. Okay. Great. Right. That's brilliant on that positive note. Thank you, James, for being so candid with me today. It's been great to have you on. You're welcome. This knows that is it for this episode. A huge thank you to James for his insights into some of the choices facing wealthy UK and overseas individuals ahead of the budget. And the key considerations that they'll be weighing up in the coming months as the new government announces how it plans to fund all of its proposals and how taxes on assets like property and wealth more generally will form part of that picture. We will be back soon, but until then for more analysis, you can subscribe to my research note, which goes out every week. Please visit the Mike Frank website. for more details. Until next time, thank you very much for listening.