Has India-born steel tycoon Lakshmi Mittal left the UK over tax scare?

Lakshmi Mittal, one of the richest men in Britain, has left the United Kingdom. He has become one of the latest billionaires to exit the country over growing frustration of the elites with tax reforms for the super-rich.

The India-born steel magnate is worth more than £15 billion according to the Sunday Times Rich List. Reports say that Mittal has now shifted his tax residence from the UK to Switzerland and plans to spend most of his time in Dubai.

Let’s take a closer look.

Who is Lakshmi Mittal?

Born in Rajasthan, Lakshmi Mittal is known by the nickname “King of Steel” for building a vast steel empire.

He joined his father’s steel business after earning a commerce degree from a college affiliated with the University of Calcutta.

Later, in his 20s, Mittal went on to establish his own steel mill in Indonesia.

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During the 1970s, the steel industry was fragmented around the world. Mittal then started acquiring underperforming state-owned mills and reshaped them to work together and more efficiently.

In 2006, he took control of Luxembourg-based rival Arcelor, giving birth to the name ArcelorMittal.

Today, ArcelorMittal is the world’s second-largest steelmaker with a value of more than £25 billion on the stock market. Mittals own nearly 40 per cent of the shares.

The company employs over 125,000 workers in more than 60 countries, including Britain. The ArcelorMittal group ranked eighth in this year’s Sunday Times Rich List.

Mittal also controls a similar percentage of the steel manufacturer Aperam and nearly half of the energy producer HPCL-Mittal Energy.

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Mittal moved to the UK in 1995, where he settled with his wife, Usha, and their two children.

He has bought some of Britain’s most expensive properties, including three homes on Kensington Palace Gardens, the street in London dubbed “Billionaires’ Row”.

He purchased a 55,000 sq ft mansion, known locally as the Taj Mittal, from Formula 1 magnate Bernie Ecclestone for £57 million in 2004. The property was built using marble from the same quarry as that used in the real Taj Mahal. The mansion boasts Turkish baths, a jewel-covered swimming pool, a ballroom and parking for 20 cars, as per The Telegraph.

A friend told The Sunday Times that the business tycoon had “no plans” yet to sell the estate.

The billionaire is also a former donor to the Labour Party, who gave more than £5 million to the Labour Party during the leaderships of Tony Blair and Gordon Brown.

He owns a stake in the London football club Queen’s Park Rangers. The Mittal family is also famous for donating millions of pounds to good causes.

Why has Lakshmi Mittal left the UK?

Reports that Lakshmi Mittal was planning to leave the UK first emerged in March, before Labour was about to end the non-dom regime.

“He is exploring his options and will take a final decision over the course of this year,” a friend of Mittal told the _Financial Times. “_There is a good chance he will cease to be a UK tax resident.”

‘Non-dom’ was used to describe a UK resident whose permanent home for tax purposes is outside the country. They paid UK tax only on the money earned in the UK, allowing them to avoid paying British tax on foreign income and capital gains.

In April, British Chancellor Rachel Reeves abolished the non-domiciled tax status. It was replaced with a residence-based regime, which brought even foreign earnings into the UK inheritance tax system.

Earlier this year, Mittal paid about £152.7 million for a baroque mansion at Emirates Hills, a gated community nicknamed the “Beverly Hills of the Middle East”. He also started buying up tracts of land on Naïa Island, which is being constructed off the United Arab Emirates’ coast.

As per The Sunday Times, it was the inheritance tax that disillusioned the 74-year-old businessman. Inheritance tax is applicable on estates above the threshold of £325,000 after the death of the owner. The heirs are usually charged at a rate of 40 per cent on the value of the estate.

“It wasn’t the tax on income [or capital gains] that was the issue,” one adviser familiar with the Mittals’ move told the British newspaper. “The issue was inheritance tax. Many wealthy people from overseas cannot understand why all of their assets, wherever they are in the world, should be subject to inheritance tax imposed by the UK Treasury. People in this situation feel they have little choice but to leave and are either sad or angry to be doing so.”

Dubai does not have an inheritance tax. In Switzerland, heirs typically do not have to pay levies on what they inherit from their parents.

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Other uber-wealthy to leave the UK over tax reforms

Lakshmi Mittal is not the only billionaire to depart from the UK over tax scare.

Herman Narula and Nik Storonsky, the founders of the tech companies Improbable and Revolut, have left Britain for Dubai.

Storonsky has praised Dubai’s “advanced infrastructure and investor-friendly policies”, as per Daily Mail. 

Billionaire brothers Ian and Richard Livingstone, who own swanky properties across London, have left Britain for Monaco.

Norwegian shipping magnate John Fredriksen shifted to Dubai earlier this year, saying Britain had “gone to hell”. German investor Christian Angermayer moved to Switzerland, labelling the non-dom changes as the UK’s “death blow”.

Nassef Sawiris, the Egyptian co-owner of Aston Villa FC, has also departed from the UK, blaming Labour’s inheritance tax move and a “decade of incompetence” under the Tories.

Billionaire developer Asif Aziz, owner of the former London Trocadero on Piccadilly Circus,  moved his tax residency to Abu Dhabi last year.

David Lesperance, the founder of tax and immigration advisory Lesperance and Partners, told Daily Mail in July that 50 per cent of his “ultra-high net worth” clients had already exited the UK since Labour came to power. He predicted that half that number would again escape the imposition of a wealth tax.

Mittal’s high-profile exit is a big blow to the Labour government as Chancellor Reeves prepares more tax hikes on the wealthy to plug a £20-billion gap in public finances.

Reeves is set to deliver her second Budget in days. However, her party has faced flak over tax reforms. She was reportedly mulling a 20 per cent exit tax on the wealthy leaving the UK, but scrapped the plans over fears it would trigger an exodus of millionaires.

With inputs from agencies