Farage is a master political salesman – but can he sell voters on a flat tax for non-doms?

Nigel Farage has a new policy on non-doms. It seems, on the face of it, quite clever.

Non-doms are a political problem. They’re rich, at a point when this country has fewer rich people than most voters probably think; and they’re almost definitionally mobile, which makes bleeding them white via a wealth tax tricky.

(It is also, whisper it, not exactly obvious why someone who owns a company in, say India, which pays all its proper taxes in India and the capital of which stays in India, should pay our taxman for the privilege of owning it. But that never stopped politicians before.)

We have already seen Rachel Reeves caught in the resulting trap. Abolishing non-dom status, along with the VAT raid on private schools, were all but the only gestures toward raising revenue in her budget. Neither is working, and the non-dom one is so counter-productive that she publicly flirted with part-reversing it.

But it has proven too politically costly to do so; like the Winter Fuel Allowance, this will just have to be one of those policies possible because the Government has “fixed the economy”, when she needs to make up the losses with revenue on middle-earners, it will presumably be broken again.

So what is Farage’s solution? The ‘Britannia Card’. Essentially, Reform UK is proposing to sell non-dom status: holders of the Britannia Card “would not be taxed on any wealth, income or capital gains earned overseas” – although still taxed on any British assets – and “exempt from inheritance tax”, according to the Times.

In exchange, the individual would buy their Britannia Card for a flat rate of £250,000, which would need to be renewed every ten years.

According to reporting, Reform has had someone crunch the numbers and calculated that if six to ten thousand people take up the cards, it could be worth between £600 to £10,000 to “2.5 million workers earning a full-time salary of less than £23,000″, who would be the primary beneficiaries. 

Reform is also keen to point out that the policy would “favour workers in Wales, Scotland and the northeast of England where baseline pay is lowest and where there is a larger share of low-paid jobs.”

Overall, it’s a fascinating policy artefact, like the fossil of some lost missing link between two known species. Conceptually, selling a flat tax is about as in tune with Farage’s free-market political origins as its possible to get; the flow of the spoils, both demographically and geographically, speaks of a party with its sights locked firmly on Labour.

Will it work? I’ll defer to tax experts on the actual numbers, but politically it’s a very interesting question.

One of the exam questions which modern British politics seems to set, and which our politicians keep failing, is how much we are prepared to forgo for the sake of bashing unpopular targets. Reeves’ revenue-negative attacks on non-doms and private schools were only following in the modern Tory tradition. (For example George Osborne and Michael Gove, by cracking down on private landlords without expanding housing supply, exacerbated the rents crisis).

Labour’s instinct will be to brand this Nigel’s flat tax for his rich mates. It will be interesting to see whether Farage’s undoubted skill as a political communicator is sufficient to overcome that and sell the voters on a policy which (assuming the numbers add up) might not hurt the rich as much, but would yield more revenue.

It also highlights Reform’s bigger strategic problem: the mismatch between their political origin and the space now opening up for them in British politics.

I’ve been re-reading Ivor Crewe and Anthony King’s history of the Social Democratic Party (I’m such fun at parties), and it seems to offer a sort-of mirror image.

Then, a party founded by a split in the Labour Party and originally conceived by at least some of its founders as ‘Labour 2.0’ had to grapple with the fact the Conservatives were in office and it proved much easier to pick up Tory seats. Tensions between those who wanted to lean into this (David Owen) and those cleave to the original vision (the rest of the Gang of Four) seriously destabilised the SDP.

Farage has no equivalent of the Gang of Four, but is himself a man of the Right, and fellow Reformers such as Richard Tice talk in blood-curdling terms of smashing the Tories. Yet Labour are in office, and all but nine of Reform’s second places at the 2024 election were in seats which currently have a Labour MP.

As a result, its obvious strategy is to focus its fire on Labour in hope of winning scores of seats across Wales, the Red Wall, and other so-called ‘left behind’ areas. Yet that is not obviously compatible with a strategy aimed at supplanting the Conservatives, who 2019 aside have a rather different electorate – one which might not, for example, be happy to be stuck paying inheritance tax when foreigners vastly more wealthy than they can opt out of it for the bargain price of £250,000.

For now, with the Tories going backwards in the polls under their own steam, this dilemma isn’t really forcing itself on Farage. But at some point, he might have to grapple with the fact that whilst one can plausibly replace one or the other of the major parties under First Past the Post, it is another thing altogether to kill both at the same time.

Reform UK eventually supplanting Labour isn’t as outlandish as it might first appear, on paper; there is a growing gulf between the latter’s socially-liberal new core vote and its old one, and whereas the Conservatives at least have a lively policy ecosystem beyond the party there really seems very little in Labour spheres by way of answers to Britain’s various strategic conundrums.

But if Farage does end up on Labour’s lawn, he inherits Labour’s problems – primarily, a public which wants more spending, but doesn’t think they should have to pay any new taxes. Given that no European country with higher spending than the UK does not also levy heavier taxes on middle earners, selling even ten thousand Britannia Cards won’t get Farage out of that one.