Warning of non-dom tax exodus

Simon Evans
Sunday 02 March 2008 01:00

The body that represents hedge funds in Britain has warned that thousands of the industry's top traders could be forced to quit the City unless the Government does a U-turn on its new non-dom tax rules.

A survey of more than 80 UK-based hedge funds by the Alternative Investment Management Association (Aima) shows that 60 per cent of those questioned will be affected by the changes that come into force in April.

London has powered to the top of the European hedge fund league table with 80 per cent of alter-native assets managed out of the capital – a position that has been put in doubt by the Chancellor's move.

"There is a real threat that key people will be forced to leave Britain," said Andrew Baker, deputy chief executive at Aima. "We've been really surprised by the speed of response and strength of feeling. We feel that the non-dom measure is policy on the hoof."

Officials from Dubai, Ireland and Switzerland are thought be heavily canvassing in London, eager to persuade unhappy non-doms to quit the UK. "We've had two major clients discuss a move to Ireland just this week," a senior hedge fund accountant said.

Last week, The Independent on Sunday revealed that the London Investment Banking Association, the CBI, the British Bankers' Association and the City of London had all made submissions to the Treasury urging a one year postponement on the non-dom rules.

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