When it comes to non-doms, Britain’s loss is Italy’s gain

Rachel Reeves should urgently realise before it is too late that Britain is cutting its nose off to spite its face, writes Chris Blackhurst

Italy is among Britain’s closest European friends. Its prime minister, Giorgia Meloni, enjoyed a close bond with Rishi Sunak and that has been replicated for Keir Starmer. Yet it seems that friendship only goes so far and, when it comes to stealing a march on its ally, the Italians are showing a clean pair of suitably smartly designed heels.

Since coming to power, Starmer and his colleagues have done their level best to drive away the non-doms, the overseas rich who choose to settle and invest in the UK in return for tax advantages. They were hit by money-raising measures in Rachel Reeves’s first Budget and while there has been a limited softening, the signal the chancellor sent was clear. Britain sees them as a target for taxation.

Our loss is Italy’s gain. The amount they are raising from non-doms is increasing annually, running into the tens of millions. That is just from taxes – the totals coming in from spending and investment are harder to quantify but likely to be substantially higher. As Reeves prepares for her next major financial statement, due shortly, she may wish to contemplate why it is that as Britain drives them away, others are doing their level best to woo them.

The consequence of her Budget is they are leaving in droves. The Office for Budget Responsibility estimates that of the 74,000 people who qualify for non-domicile status, up to 12 per cent and 25 per cent of those who hold assets in trust, which is many, will quit the UK this year alone. One of the very wealthiest has recently bought a property in Dubai for $250m and while he is to maintain a grand house in London, where once he employed 80 domestic and other staff, that number will fall to 15. That’s 65 folks out of work.

Step forward Italy. Not as large economically as the UK and lacking the international financial clout of the City, Meloni’s nation has nevertheless been quick to move in. It’s determined to compete for the world’s wealthiest, even if its pal, Britain, is not or at least is no longer so resolute and equipped.

‘Reeves should urgently realise before it is too late that Britain is cutting its nose off to spite its face’ (PA)

According to Inigo Lambertini, the Italian ambassador to the UK, there are between 4,500 and 5,000 non-dom equivalents in Italy, around half of whom are in the Milan region. The tally is growing. He told The Independent, “The number of non-doms in Italy has been growing by 45 per cent each year since the introduction of the regime seven years ago.”

Their contribution to Italian financial wellbeing is also rising. Italy’s Court of Audit says they paid €254m in taxes between 2018 and 2022, of which €232m was from the main non-dom and just under €22m from their family members.

More important and more difficult to assess is how much they spend and invest in Italy. Needless to say, it’s hefty and increasing, as they seek to employ locals, and fund retail, property development and service industries.

Italy is facing tough global competition as other nations seek their presence and a share of their wealth. In particular, the UAE and Switzerland are making a serious play for the world’s richest, but so too is the US, where the new president, Donald Trump has announced a $5m golden residency visa.

There is some political opposition in Italy but not much. Mostly it consists of grumbling about climbing property prices in Milan. Lambertini says it is more than cancelled out by the realisation that “moving their fiscal residence usually comes with substantial investments and expenditure in real estate, services and retail”. Once in Italy, he says, they become embedded, they like what they see and these are not people content with putting their feet up – they want their cash to always work for them, so their choice of Italy “can also ensure more direct exposure to the Italian economic and industrial fabric, spurring growing direct investments”.

While Starmer and Reeves seem intent on throwing away something that other economies do not have – albeit to plug a hole in the British public purse – those countries are grateful for the opportunity to appeal to them. Italy, for instance, is doing everything in its power to persuade them to head to the land of great food, fashion, piazzas and sunshine, not to mention ease of business access to the EU and has no set limit on how many it can take. Please come, the more the merrier, is the message.

Meloni and co cannot believe their British friend’s generosity... or should that be short-sightedness? Reeves should urgently realise before it is too late that Britain is cutting its nose off to spite its face.