Hitting non-doms 'could damage Britain's recovery'

A fresh crackdown on "non-doms" could be counter productive and may even damage the UK's economic recovery, warn tax experts.

Chancellor George Osborne is said to be considering a more punitive tax regime for the 120,000 non-doms who remain in Britain following the earlier move by Gordon Brown to make them pay up.

The former prime minister introduced a £30,000 annual levy on non-doms who have been here for seven years or more.

Before then, their status ensured they would not be taxed in the UK on foreign assets or gains from property sales overseas.

That move raised about £160 million but resulted in around 16,000 super rich businessmen quitting the country.

Tax advisers say the £160 million should be offset against how much money the non doms and their often quite large families spend here in the first place.

According to The Sunday Times, the Chancellor is looking at expanding the rules, either by increasing the amount or cutting how long the non-doms, such as Lakshmi Mittal, are exempt from the levy.

Phil Berwick of tax specialists McGrigors said: "The problem the Government has got it that it needs to raise money.

"But the sort of people we are talking about are internationally mobile. They could just as easily relocate as pay up."

With public fury at the banking crisis and the ensuing recession still high, the super rich are seen as a good target by many.

Added Berwick: "It's an easy win politically to attack that particular group. And the £30,000 isn't particularly punitive for the super rich. But if it was say £250,000, that would encourage many to leave."

Treasury forecasts indicate that it expects to receive £350 million for the last tax year under the present non-dom tax regime.

That's on top of the £4 billion or so those people pay in UK income tax each year.