Darling’s plans, to charge non-domiciled residents an annual £30,000 after they have lived in the UK for seven years, have been attacked by the City of London and trade and investment minister Lord Digby Jones broke ranks last week to warn that they would encourage wealth-creating individuals to leave the UK.
In a letter to Darling, Osborne says his solution to introduce an annual levy of around £25,000 with no further tax changes for at least a parliament strikes the “right balance between fairness and competitiveness”.
He says: “I urge you to abandon these proposals and instead implement the original Conservative proposals that I announced in October. The principles underlying any changes to the domicile tax rules should be simplicity and certainty.
“That is part of the reason why my proposals were broadly welcomed at the time by both tax professionals and the City of London. In contrast the proposals set out in the Treasury consultation document fail to meet either of those principles. It is not too late to abandon your ill-thought out and badly conceived plans.”
Osborne also urges Darling to take into account a report put out yesterday by the Society of Trust and Estate Practitioners which found over half of the wealthiest individuals in the UK were either leaving or planning to leave Britain as a result of the proposed changes. The report also estimated the plans would cost the Government over £2bn rather than raising £800m as expected.