Sweeping changes to?the UK’s inheritance tax rules that bring pension pots and properties held overseas into the Treasury’s net will make it much harder to?recruit leading international researchers, it?has been claimed.
While reforms announced in?last month’s budget are designed to?target “non-doms” – long-term residents in the UK who have used a?tax status to?avoid paying tax on?foreign assets – there are concerns that the new residence-based system’s treatment of?non-UK assets might deter many mid- to late-career academics from coming to?Britain.
Under the changes, anyone living in the UK for 10 to 13 years will be after leaving the UK, with assets remaining taxable for an additional year for every year lived in the UK after that. For example, a person living in the UK for 20 years would remain in the inheritance tax net for 10 years.
That change could mean that senior academics who have built up pension pots or hold property overseas – such as in Australia or the US, where there is no federal inheritance tax – would be?unwilling to come to the UK if they might face , said Timothy Devinney, professor of international business at the University of Manchester, who noted that the tax changes could cost his family as much as ?1.6?million, and will “likely accelerate my leaving the?UK”.
“I don’t think my situation is unique,” said Professor Devinney, who explained that he “came to the UK [11?years ago] after 20-plus years working mainly in the US and Australia” and that he still owns a “house in Australia and has pensions there and in the?US”.
Similar to “many middle-class professionals who have moved to the UK after building a career elsewhere”, Pittsburgh-born Professor Devinney said he and other overseas scholars were shocked that “everything you saved and worked for over 10, 20 or 30?years is now in the sights of the UK’s Treasury”.
“At my business school, we have dozens of senior professors who have been working in the UK after building a career elsewhere. Most all of them have pensions or residences [overseas]. I?know a number who, like me, have to reconsider the?UK as our home,” added Professor Devinney, claiming that this would be a “killer for our ability to hire senior people”.
“We have been courting someone who is in their fifties and is both a Canadian and a German. No?way he will ever come now given that he has assets,” Professor Devinney continued, adding that the change “would not primarily affect non-doms with boatloads of cash…but middle-class workers, such as doctors, dentists and nurses, doing important jobs”.
With international staff already having to contend with “salary issues, visa issues, Brexit-related issues and so?on”, the issue would “add yet more ‘minuses’ into the equation when recruiting talent is increasingly difficult”, he said, adding: “Throw another complication into the mix and people who are talented and have options simply say that the hassle is too much.”
According to the Treasury, the changes to non-dom tax rules, which take effect from April 2025, are likely to raise ?12.7?billion over the five years, with a spokesperson stating that the “outdated non-dom tax regime” was being replaced by a “new, internationally competitive residence-based regime focused on attracting the best talent and investment to the?UK”.
