 "Lakshmi Mittal meets France's President Emmanuel Macron. Mittal is looking to relocate to destinations such as Dubai, Switzerland, and Italy. Reuters")
Is Lakshmi Mittal leaving the UK?
A new report says the steel tycoon is considering leaving the country after a change in the country’s “non-dom” tax regime.
Mittal, executive chairman of ArcelorMittal, is among the wealthiest people in the UK.
His net worth is estimated at $19.30 billion.
But what do we know about Mittal’s plans? And what’s the tax change bothering the UK’s rich and famous?
Let’s take a closer look:
What do we know?
According to Financial Times, Mittal told people close to him that he is considering leaving the UK.
This comes after the UK government moved to end tax exemptions for foreign income and gains.
“He is exploring his options and will take a final decision over the course of this year,” a friend of Mittal told the newspaper.
“There is a good chance he will cease to be a UK tax resident.”
The development comes as the UK’s Labour government has decided to abolish the “non-dom” tax regime effective April 2025.
As per Business Standard, Mittal is likely eyeing destinations such as Dubai, Switzerland, and Italy.
All these locations have attractive tax incentives for ultra-high-net-worth individuals.
What do we know about the UK’s nom-dom tax regime?
As per BBC, “non-dom” status applies to a UK resident whose permanent home is overseas.
The system has been around for 226 years.
Non-dom usually refers to the person’s tax status – not his citizenship, nationality or resident status.
This status is usually acquired for tax purposes.
A person with non-dom status only has to pay tax on money that he or she earns in the UK.
Income from abroad is not taxed unless it goes into an account in the UK.
This allows wealthy individuals to decrease their tax burden by choosing a country with lower taxes as their domicile.
Akshata Murty, the wife of former UK prime minister Rishi Sunak’s wife, was a high-profile example of someone with “non-dom” status.
After details of Murty’s status were revealed to much uproar, she announced she would start paying taxes on earnings outside the UK.
The decision to do away with the non-dom status was made in March 2024 by the-then Conservative Chancellor Jeremy Hunt.
Hunt, saying those with the broadest shoulders should pay more tax, said “transitional arrangements” would be made.
Labour in its October 2024 Budget went a step further.
British finance minister Rachel Reeves said she would close non-dom exemptions and thus raise $16.47 billion over the next five years.
Reeves said the Labour government would go further by closing unspecified loopholes and introducing a new scheme.
“I have always said that if you make Britain your home, you should pay your tax here,” Reeves told parliament as she announced her first annual budget.
“We have been listening to the concerns that have been raised by the non-dom community,” Reeves added.
The government has said the new system will be a “residence-based” regime – with foreign earnings coming under the UK inheritance tax system, as per BBC.
As per Self-employed.com, under the new system, new UK non-doms will pay no tax on foreign income till 2029.
They will only pay tax on gains.
Those who have non-dom status will be given a two-year grace period to transition.
After that lapses, they will be taxed on all income from abroad.
The UK in 2022-2023 had around 74,000 people with non-dom status, as per BBC.
Private banks and advisers to the super-rich have said some clients with non-dom status will quit the country if the government increases taxes on them.
Over 10,000 millionaires left the UK in 2024, as per Self-Employed.com.
As per Financial Times, those who relocate abroad can usually spend around 90 days in Britain every year.
They are allowed to work for 30 days a year.
The newspaper noted that Mittal, if he follows through, will be among the ultra-high-net-worth individuals in the UK choosing to relocate.
The United Arab Emirates, Switzerland, and Italy are destinations of choice for the financial elite, as per the newspaper.
Experts say this is a massive development.
Peter Triggs, a veteran in international wealth planning and partner at 1291 Group, told Hubbis, “The shift away from domicile to a residence-based system is monumental.”
“It identifies the UK clearly as a pure residency-based tax system, as indeed are the majority of other jurisdictions, but for many wealthy individuals with a UK connection and their advisers, it’s a seismic change.”
“These changes have been coming in waves since the 1980s,” Peter explains. “What’s different this time is that domicile ( the concept of your ‘true home’) has been sidelined entirely. Residency is now the key determinant for tax purposes.”
With inputs from agencies