Jones Questions UK Non-Dom Tax Policy

by Jason Gorringe, Tax-News.com, London

08 February 2008

UK Trade and Investment Minister Digby Jones has broken ranks with the government with regard to its plans to introduce a new tax charge on non-domiciled UK residents, warning that the proposal threatens London's status as an international financial centre.

Jones, formerly Director General of the Confederation of British Industry (CBI), told the Financial Times in an interview published on Friday that, in his experience as the minister responsible for promoting the UK to potential foreign investors, reaction to the government's plans was broadly negative.

"It (the tax changes) has caused people to say, 'Does this mean you don't want us?'," he stated, going on to caution that the UK was losing its "badge as the place to come and bring your skill and work hard in the developed world".

Under the government's proposals, so called 'non-doms' - UK residents who are non-domiciled - will have to pay an annual charge of GBP30,000 to ensure that they contribute in respect of the foreign income and gains which they keep abroad and on which they do not pay UK tax. While the government says that the charge will only be applicable once an individual has been resident in the UK for seven years, the proposals have received widespread condemnation from the business and financial services community, which sees the idea as another example of pulling up the welcome mat for foreign investors - concerns that seem to be shared by Jones.

"I can give you five reasons as to why you should invest in Britain before you go and invest anywhere else in Europe. But maybe there were seven and now there are five," he told the FT.

Jones was somewhat controversially brought into the government by Prime Minister Gordon Brown last year, ostensibly to help put a business perspective on policy, as part of Brown's plan to create "a government of all the talents". He has been made a Labour peer and has taken the Labour whip, but has no affiliation to the Labour Party, and his frequent criticism of its record on tax and regulation when CBI Director General has continued while serving as a minister under Brown.

"I don't want to be in the position where one morning we wake up and people are saying, 'Digby: no matter how good you are at doing what you do, the product isn't as good as it was'," he told the FT.

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