Plans for special visas designed to attract wealthy people from abroad to the UK risk opening the doors to “kleptocrats, fraudsters and proxies for hostile regimes”, the Chancellor has been warned.
Rachel Reeves is reportedly considering introducing a special visa for rich foreigners who could invest in Britain amid concerns that government crackdowns on tax are driving millionaires out of the country.
But the scheme, which would be open to people who could invest in “strategically important” industries such as AI and clean energy, is controversial.
In a letter to Ms Reeves, charities, including the UK Anti-Corruption Coalition and Patriotic Millionaires UK, said: “Past experience suggests this would be misguided, offer minimal economic benefit and expose the UK to acute national security risks by facilitating foreign influence and the flow of illicit finance.”
Last year Labour announced it would be abolishing the non-domiciles tax status, which allows non-doms to only pay UK tax on money they earn in the country.
The loophole meant wealthy individuals were able to legally save money by choosing a lower-tax country as their permanent home.
Earlier this year, Ms Reeves said that after listening to "concerns raised by the non-dom community", she would introduce a more generous transition phase to the policy.
There were reports she was considering watering down the policy further after claims it has triggered an exodus of millionaires from Britain.
The government says its package of measures would raise £12.7 billion in the next five years.
But the Centre for Economics and Business Research (CEBR) has suggested that removing tax exemptions for non-dom residents could cost up to £12.2 billion in fewer tax receipts over the course of this Parliament due to the departure of wealthy individuals.
Previously, Britain offered residency to investors who put more than £2 million into the country.
However, that golden visa scheme was scrapped in 2022 following Russia’s invasion of Ukraine as part of a crackdown on “illicit finance”.
Other countries have also cancelled their golden visa programmes.
These include Ireland and Australia. Spain abolished them earlier this year because of concerns that foreign property investors were contributing to a housing crisis.
Some Labour ministers want to revive golden visas to boost investment, but the plan is facing political challenges, the Financial Times reported.
Marit Rødevand, CEO of anti-money laundering company Strise, said: “The proposed reinstatement of a golden visa scheme, however selective or ‘strategic’ it may sound, is a shortcut to reputational risk.
“Even when well intentioned, these schemes have historically attracted the exact bad actors that we seek to keep out, with minimal economic benefit.
“Kleptocrats, fraudsters, and proxies for hostile regimes will all be welcomed into the UK, to resume nefarious activities and continue evading sanctions.
“Indeed, this is why the visa was originally scrapped in 2022 - due to a disproportionate number of applications from countries identified in the UK’s National Risk Assessment of money laundering and terrorist financing. The message was clear: the scheme did not work.”
