'Self defeating' tax could hit Lancashire's economy

THE DECISION to charge high earning foreign workers to work in the UK may backfire according to a leading Blackpool accountancy firm.

Any non-domiciled worker who has lived and worked in the UK for seven years, but who declares their home to be elsewhere, now has to pay a £30,000 annual charge to work in the UK on top of the 40 per cent tax that they already pay on their normal earnings.

The decision by the Government to make the tax law change may prove to be detrimental to Lancashire’s economy, according to Andrew Norman, partner at Blackpool based Moore and Smalley Chartered Accountants and Business Advisors.

Andrew said: “On paper £30,000 doesn’t seem a massive amount for high earning workers to pay out, however in the current economic climate it could be a tax that forces them to move elsewhere.

“The UK’s economy is going through a period of uncertainty; over the past few days The Bank of England has said that the UK’s inflation situation is set to worsen and on a more local level house prices in Lancashire dropped by 5.5 per cent over the first quarter of the year.

“The UK may no longer be the attractive prospect that it once was to non-domiciles who are already here and those who are contemplating a move, and the charge may well worsen the situation.

According to Treasury estimates, the 200,000 non-domiciles who currently reside in the UK are set to contribute £800m in taxes in 2009/10 and £500m in 2010/11.

Andrew continues: “If only 25 per cent of workers decide to leave the UK, the country still could lose £325 million, not to mention a priceless wealth of knowledge.”

The UK is one of the few countries in the world that only tax income that is earned in the UK, instead of a global tax on earnings and assets in other countries.