FT City Network: support for Labour's non-dom reforms

There is clear appetite for reform of the UK's "non-domicile" tax system among some of the City of London's elite, giving heart to Ed Miliband's plan to scrap the 200-year-old regime.

Despite widespread scepticism in the City about some of the policies of a prospective Labour government, prominent contributors to the Financial Times's latest City Network debate suggest the non-dom rules should be changed and loopholes closed in line with the Labour policy initiative.

Alison Carnwath, chairman of Land Securities, thinks the rules are "out of date and should be scrapped", and explicitly backs Mr Miliband's plan.

"The non-dom issue invites criticism and ignites public anger," writes Sir Roger Carr, chairman of BAE Systems. "It is seen as a relic of the past which unfairly favours the few at the expense of the many."

Katherine Garrett-Cox, who heads investment firm Alliance Trust, says: "The rules around non-doms are confusing and clarification would be beneficial for everyone."

The FT City Network is an invitation-only panel of more than 60 leaders from London's finance and business community. Each month the network debates a topical subject.

Labour's plan to abolish non-dom status was portrayed by the Conservatives as another reason for the business world to distrust Mr Miliband. The Labour leader has few fans in the City of London, having pledged to reintroduce a bankers' bonus tax alongside a new "mansion tax" on expensive property.

Many in the City are nonetheless torn in their traditional loyalty to the Conservatives, because of the Tory pledge for a referendum on EU membership. The vast majority of the financial services industry, and large swathes of big business, are convinced that exiting the EU would undermine the British economy.

Mr Miliband's non-dom initiative had been targeted at core Labour voters, angered by uneven tax treatment and the growing gap between Britain's rich and poor. But the sympathetic reception it has received among some City bigwigs is likely to come as a pleasant surprise to Labour policy makers.

Lord (Mervyn) Davies, the banker turned private equity executive who served as trade minister in the last Labour government, told the debate: "London… should not be a centre for people who do not want to pay their fair share of taxes. That's why revolutions happen."

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Non-doms themselves are mostly hostile to the planned changes. Some of the non-dom members of the FT City Network declined to participate in the debate, for fear of appearing self-serving, but in private some of them expressed enthusiasm for reform. One described the rules as "anomalous" in treating the foreign investments of non-doms differently from foreign investments by "normal" British nationals.

There was not universal support for changes to the non-dom regime in the debate. Several contributors argued that London's receptiveness as a global financial centre could be put at risk.

Non-dom status allows foreign nationals and even some British nationals to reside in the UK but cite another country as their real domicile, avoiding full UK tax on their overseas earnings in the process.

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