Lakshmi Mittal may leave UK over tax law change: Report 

Steel tycoon Lakshmi Mittal s contemplating relocating from the UK due to the Labour government's recent decision to eliminate the "non-dom" tax regime, a report in the Financial Times stated.

Mittal, a key figure in the business world, has been residing in the UK for almost three decades. The reported reason for his potential departure is the government's decision to discontinue tax exemptions for specific foreign income and gains.

It comes after the UK government decided to abolish a policy that allowed certain residents to avoid paying taxes in the UK on their foreign income and gains.

“He is exploring his options and will take a final decision over the course of this year,” Mittal's friend told FT. “There is a good chance he will cease to be a UK tax resident.”

Mittal, a self-made billionaire, successfully grew his steel business into the world’s second-largest steel producer, known as ArcelorMittal. In 2021, he transitioned from his role as CEO to become the executive chairman, with his son, Aditya Mittal, taking over as CEO. The Mittal family holds a 40% ownership stake in the €24 billion company.

According to the Sunday Times list of Britain's wealthiest individuals last year, Mittal and his family were ranked seventh, boasting an estimated fortune of £14.9 billion. The billionaire holds various properties across Europe, the US, and Asia, including a chalet in St Moritz, Switzerland, and has been actively investing in real estate in Dubai.

Mittal is the proprietor of numerous real estate assets in the United Kingdom, among them a grand residence located in Kensington Palace Gardens in London. This property held the title of the world's priciest home at the time of its acquisition from former Formula 1 chief Bernie Ecclestone for a sum of £67mn in 2004.

What is 'non-dom' tax regime?

Last year, UK Chancellor Jeremy Hunt disclosed the proposal to eliminate the controversial 'non-domiciled' tax status. A "non-dom" is a term used in the UK to describe a resident whose permanent home, or domicile, for tax purposes is located outside the UK. This designation is based on an individual's tax status and is not related to their nationality, citizenship, or resident status, although these factors can influence it.

Non-doms are only required to pay UK tax on income earned within the UK, and they are not obligated to pay tax to the UK government on income generated elsewhere in the world, unless that money is transferred into a UK bank account.

This special status allowed wealthy residents, often foreign nationals residing in the UK but asserting their permanent residence elsewhere, to avoid paying taxes on income earned abroad, unless it was brought into the UK. This loophole has been favoured by billionaires residing in London, according to a report by Reuters.

The elimination of the long-standing "non-dom" regime, in place for 226 years, has prompted apprehension among the upper class. Many individuals within this demographic are considering relocating to jurisdictions known for their favorable tax conditions, such as the United Arab Emirates, Switzerland, and Italy.

For affluent individuals, being classified as a non-dom offers the potential to achieve significant tax savings by selecting a country with lower tax rates as their domicile. One prominent example of a non-dom is Akshata Murty, the wife of former Prime Minister Rishi Sunak.

Following public disclosure of her non-dom status, she announced her decision to commence paying UK tax on earnings generated outside of the UK.

Critics of dismantling the non-dom regime argue that the departure of high-income earners will have a negative impact on the UK's economic growth. They assert that affluent individuals and their employees contribute to the nation's revenue through income and consumption taxes, as well as charitable donations.

UK taxpayers who choose to relocate abroad are subject to limitations on their time spent in Britain. Generally, they are permitted to stay for a maximum of 90 days per year, with a condition that they do not engage in work for more than 30 days during that period. 

Non-doms in UK

The most recent data from HM Revenue & Customs (HMRC), as reported by BBC, showed that in the 2022-23 tax year, 74,000 individuals claimed non-domicile status. This marked an increase from 68,900 in the previous year, with HMRC attributing the rise to a higher number of non-domiciled taxpayers following the Covid pandemic.

Taxation Rules for Non-Dom Status

If someone is a non-dom residing outside the UK and opt not to pay tax on overseas income in the UK, the following rules apply:

£30,000 if you have been in the UK for at least seven of the previous nine tax years
£60,000 for at least 12 of the previous 14 tax years

As of 2017, changes were made to the non-dom rules. You are no longer eligible for this status if you have been a UK resident for 15 out of the previous 20 years or if the following conditions are met:

You were born in the UK
Your domicile of origin is in the UK
You have been a UK resident for at least a year since 2017

However, if you earn less than £2,000 annually from foreign income and do not bring that money into the UK, no action is required on your part.