At its Investment and Growth summit at the House of Lords on Thursday, Foreign Investors for Britain (FIFB) will make the case for a UK Investor Visa, arguing the country needs to attract and retain wealth.
But will the government start listening to it? Tom Bill, head of UK residential research at Knight Frank, is not convinced.
He highlights that at the last FIFB Parliamentary reception in July, key government officials were notable by their absence as business leaders including Martin Sorrell outlined the damage done to the UK economy by pushing wealth creators away.
Bill commented: “With the financial pressure on the government so intense that ministers are considering a manifesto breach by raising income tax to help plug the £30bn black hole, surely any ideological objections must begin to waver?
FIFB estimates an investor visa would raise £225bn over a decade through a combination of a fixed annual charge of £200,000 and a minimum investment of £2.5m over the ten years.
“The closure of the Tier 1 Investor Visa in 2022 created a vacuum for productive foreign capital,” FIFB chief executive Leslie MacLeod-Miller said. “At the same time, the non-dom tax changes did not find the right balance for the UK to be internationally competitive to retain and attract foreign investment. The Global Investor Visa is not merely a tool for attracting capital but a vital lifeline for securing Britain’s economic future amidst fierce global competition for investment”
The non dom departure
Under the previous regime, non-doms could live in this country without paying UK tax on their overseas wealth. New residence-based rules were introduced in April that have a four-year time limit and mean overseas assets are subject to UK inheritance tax.
As a result, a large number of non doms have left for countries including the UAE, Switzerland and Italy, although not everyone has necessarily sold their UK property.
There is unlikely to be any investor visa news at the Budget because it comes under the remit of the Home Office, but FIFB hopes the billions potentially raised will make the Treasury sit up and pay attention.
The more hostile environment faced by wealthy overseas investors, which also includes increased stamp duty for additional homes, means prime property markets have slowed this year.
Property prices in prime central London fell 4% in the year to October. That compares to average UK growth of 1.9%, as the Halifax reported last week.
Hundreds of millions of pounds in stamp duty have already been lost, according to recent Knight Frank estimates.
In fact, the government recently lost £2.5m on a single deal thanks to the pre-Budget uncertainty, according to Stuart Bailey, head of prime central London sales at Knight Frank. “We’ve lost transactions because buyers have believed some of the speculation and pulled out,” said Stuart, speaking on the latest episode of the Housing Unpacked podcast. “One of those transactions had two and a half million pounds of stamp duty attached to it. You can imagine how many millions the government has lost as a consequence.”
On Thursday this week the government will have a clearer idea of whether it needs to breach its manifesto promise on income tax.
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