Lakshmi Mittal, the Indian-origin steel billionaire in UK, is leaving the country amid the Labour government’s new tax reforms targeting the super-rich, including changes to inheritance tax, local media reported. According to The Sunday Times, Mittal is currently tax-resident in Switzerland but he will now spend most of his time in Dubai.
Why is Lakshmi Mittal moving out of UK?
While there is no word on the moving out by Mittal’s team, a key driver behind this decision could likely be the abolition of the UK’s long-standing “non-domiciled” (non-dom) tax status. This status previously allowed wealthy residents to pay tax only on income earned within the UK, shielding their global assets from UK inheritance tax.
With the ‘super rich tax’ expected to be passed during the next budget on November 26, UK’s elites would now have to pay more tax on their total wealth and income, including assets held abroad. They may also face taxes up to 20% if they leave the UK to avoid paying, the Guardian had earlier reported.
For Mittal, however, inheritance tax, rather than income or capital gains tax, was a key concern, a source close to the Mittals told Business Today.
What is the inheritance tax?
Inheritance Tax (IHT) is a tax applied only when someone dies and leaves an estate above certain thresholds (currently £325,000, or higher with home allowances).
It taxes the value of the estate transferred to heirs, typically at a rate of 40% on amounts above the threshold. “People in this situation feel they have little choice but to leave and are either sad or angry to be doing so,” BT report further stated sources as saying.
Such financial burdens and uncertainty prompted Mittal, who is currently tax-resident in Switzerland, to relocate primarily to Dubai, according to PTI. Dubai and Switzerland levy no inheritance tax, unlike the UK.
Mittal already owns a mansion in Dubai’s prestigious Emirates Hills community and has invested in property developments in the emirate, Business Today reported.
Other wealthy entrepreneurs also depart UK
His departure is part of a broader exodus of high-net-worth individuals and entrepreneurs, such as Herman Narula, Rio Ferdinand, and Nassef Sawiris, who view the UK’s tightened tax regime as undermining its attractiveness as a base for wealth and business investment.
