What does Ritchie mean here?

So non-dom-owned businesses now have access to cheaper capital in the UK than those owned by domiciled people, putting local people at an inherent disadvantage.

The price of capital is the return you have to give in order to get it. That price is of course affected by the taxes that have to be aid on that return. This is why the more open an economy the more taxes supposedly upon capital actually fall upon the workers.

But I can\’t make head nor tail of his assertion after that: that non-doms get to invest in the UK upon preferential terms. They don\’t at all. They must pay exactly the same taxes on UK sourced income as UK doms and UK residents. Thus the returns they get from capital will be the same as anyone elses\’ and the prices they demand for their capital will thus be the same.

So, err, what\’s he talking bout?

15 thoughts on “What does Ritchie mean here?”

  1. It’s about the source of that capital being tax-free, not the return on it once it’s invested in the UK.

    Money owned by non-doms, made and kept outside the UK – not taxable in the UK, so if it arose in a non-tax country then it’s not been taxed.

    If it’s brought into the UK then it’s normally taxed, as income. But there’s a new provision that lets non-doms bring foreign money into the UK, to invest in unquoted companies.

    So non-doms can invest out of untaxed income, while other UK residents can only invest out of taxed income.

  2. I think he is confusing no-dom and foreign?

    Unless it is this:

    If a non-dom owns a UK company through a foreign (let’s admit tax haven) holding company, they can remit dividends to that holding company and not get charged UK tax unless they draw into the UK funds from that holding company.

    Or, of course, they could just pay themselves what they need / want to spend / fritter in the UK directly from their UK assets (paying UK tax thereon) and balance payments to or from the tax haven entity/ies.

    Or, simply, you could assume that Murphy is a fanatic. In the Churchillian sense. As well as deluded.

  3. But I still think his basic point is wrong.

    The non-dom has non-UK money that he’s thinking of investing; he’ll still want the same return on it whether he keeps it offshore or (under the new rules) invests in the UK.

    The non-dom investor has an advantage, that he’s got 100% of his gross income to invest rather than just 50% for a normal UK resident. But that doesn’t give any advantage to the company he invests in – he’ll still want the same return on each £ of capital.

    Under the old rules he’d actually want a higher return to invest in the UK, because it would be taxed as income when he brought it into the UK to invest. All this new rule has done is got rid of that anomaly.

  4. Taking Richard’s post at #1 in to account and doing a bit of Googling, it is simple rubbish.

    It has nothing to do with the ownership of the business – it is merely equalising (for qualifying investments) and, admittedly, in the favour of non-doms, non-dom patriation of funds for investment purposes with foreign importation of funds for investment purposes.

    So random foreign billionaire can bring funds in to the UK for a range of business investments regardless of whether they count, for tax purposes, as a UK non-dom or a UK foreigner. And that investment can be into UK owned, non-dom owned or foreign owned businesses. Just not, currently, quoted companies (which you can usually buy shares in outside the UK anyway …)

  5. And missing the point that non-doms are often resident in countries with similar taxation to the UK so they won’t, pace Richard at #3, have 100% of their gross income* to invest – they’ll have 100% minus whatever their local tax-man appropriates, extorts or thieves from them (depending on where they live and recognising that some ‘tax’ may be paid in bribes to get the officials to look the other way rather than into the national exchequer.)

    * And noting that they will have wealth to invest, rather than income. But wealth patriated into the UK would count as income for UK tax purposes. Which is interesting – buy X abroad, import it & pay duty, sell it, pay CGT. There must be a wide range of X for which duty + CGT would be less than income tax?

  6. So what you’re all saying is that this provision makes it easier for Johnny Foreigner to invest money in the UK, bringing wealth, jobs and capital into the country? The rotter.

  7. No, Matthew – they’ll be living here in houses none of us could afford anyway, eating at restaurants none of us could get a table at (although many of those are surprisingly vfm) and driving hideously expensive sports cars in London (where nobody sane drives unless they are being paid to so do.)

    Therefore it is a catastrophe. The very bedrock of our ageless (sic) Blairite civilisation (sic) is being undermined by this hideous Tory pandering to their non-dom masters. Grab your pitchforks and march on Mayfair, comrades, the revolting-oloution is here! Occupy Congress House and demand just-ice*!

    * literary allusion.

  8. Eel
    That is really a pile of old wank. I’m not surprised you bothered, though.

    At what stage do any of you engage with reality?

  9. How would requiring non-doms to pay UK tax on income they have earned elsewhere be consistent with Ritchie’s stated belief that taxes should be paid where the money is earned?

  10. Frances, as he showed with Vodafone, Murphy believes that everyone should pay tax where their income is earned and also to the UK Treasury.

  11. That is really a pile of old wank

    Is it true that, to become a true follower of St Richard of WGCE, you have to have your sarcasm and irony neurons burned out?

    However, I’ll stand by para 1. None of us are going to be buying houses in Kensington Palace Gardens or on the Sandbanks peninsular. In fact, I’ll buy dinner at the Army and Navy for any timworstall.com reader who can prove they own a house in either location. Even for estate agent definitions of “house”.

    I’ve actually eaten at the Ivy and a couple of other celebrated (and even ‘nice’) London restaurants (and my Dad is celebrating his 70th at Noma this weekend) but, frankly, none of us, not even Arnald are (in)famous enough to get a booking at many of these places. I was certainly hanging on the coat-tails of people with more expansive expense accounts!

    And, yes, I used to regularly walk past a Veyron Super Sport which was parked on St James St. On my way to the Green Park tube station. If you’re neither a taxi (okay, I’ll include chauffeur) nor bus driver, you’ve got to be nuts to drive in central London. As is regularly demonstrated by the central London sub-species of white-van-man.

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