London: The chief executive of the Baltic Exchange has defended tax contributions made by non-domiciled shipowners in the UK, in the wake of comments made today by Ed Miliband, the Labour party’s candidate for UK prime minister.
In a speech delivered today at the University of Warwick, Labour party leader Ed Miliband called tax concessions for non-UK-domiciled residents a “200-year-old loophole”, which costs the UK economy hundreds of millions in tax revenues.
Many foreign shipowners temporarily live in the UK and pay normal tax on their UK income and capital gains, as well as any remittances from abroad.
Non-domiciled residents who have been in the UK for a significant period of time pay up to £90,000 per annum to secure their non-domiciled status, which enables them to ensure their global businesses are not brought into the UK tax regime.
Miliband today suggested abolishing the non-domiciled rule, after which “anyone permanently resident in the UK will pay tax in the same way”.
“Shipowners who reside in the UK but whose global businesses are not subject to UK tax, contribute between £1bn and £2bn per annum in revenue to the UK maritime business services sector (lawyers, brokers, financiers and insurers),” Jeremy Penn, chief executive of the Baltic Exchange, said today.
“All this revenue, which is in addition to the substantial tax paid by the non-domiciled residents, will disappear if the non-domiciled tax concession is abolished.”
In 2008, a new tax of £30,000 a year on “non-domiciled” businesspeople and their enterprises in the UK was levied by then chancellor Alistair Darling under Labour prime minister Gordon Brown. This prompted many non-UK-domiciled Greek shipowners and big players in the shipping industry to leave the country, taking with them much of the estimated £30bn they were at that time estimated to contribute to the wider UK economy.
The UK general election will be held on May 7.