The British public will miss out on seeing some of the greatest works of art in the world because of the Government’s tax plans for nondomiciled foreigners, the director of the Tate said yesterday.

Such is the alarm about the proposed legislation for foreigners who are resident in Britain that many of the wealthiest individuals, who are some of the most generous philanthropists of the museum world, plan to abandon Britain.

Under the proposed changes bringing art into Britain will, from April, involve a tax charge of 40 per cent of the art’s value. Rules that will prevent a non-domicile from bringing art into the country without having to pay tax could damage exhibitions.

Sir Nicholas Serota said that the loss of non-domiciled foreigners living in Britain will have a devastating impact on the nation’s museums and galleries. The purchase of key works for collections will come to an abrupt halt and funds for building projects, such as the planned £215 million extension to Tate Modern, will dry up.

Tate Modern, which attracts more than five million visitors a year, could never have been built for £134.5 million without the help of non-domiciles, Sir Nicholas said. The renovation of galleries in the Victoria and Albert Museum could also be halted, Mark Jones, its director said.

A leading arts benefactor who insisted on anonymity, told The Times: “The Tate will get slaughtered. Look through their [list of] donors. There are hardly any British people. Tate 2 is never going to get the money. The Government has no idea what they’re unleashing. The largest donors to the Tate, the Serpentine, the Victoria and Albert, the Ashmolean are populated by foreigners. They will simply leave the country now.”

Five of the largest donors at the Tate are non-domiciles. They include Noam Gottesman, an American businessman and noted collector. He is believed to have given more than £1 million to Tate Modern’s construction and he bought a variety of art to fill the galleries – notably Untitled (Rooms) by Rachel Whiteread, a Turner prizewinner.

One observer said that non-domiciles head to whatever city offers them the most favourable financial conditions and do their bit for the community. In the past 20 years London has attracted them but they are now focusing on Geneva and New York.

Sir Nicholas said: “My fear is that people who have works in the collection will take them out simply out of fear of what is to come.”

New ‘nom-dom’ rules

— From April 5 non-domiciled residents who have been in Britain for seven years must pay an annual fee of £30,000 if they want to be exempt from tax on their offshore income and gains

— Those who take advantage of this exemption will lose their personal allowances for income tax and capital gains tax

— Those who also pay tax in foreign countries won’t get credit for the £30,000 fee

— Tax will be levied on any gains from offshore trusts – this will be backdated for ten years

— All noncash assets, such as art and jewellery, brought into the country will be taxed – this will be backdated indefinitely

— All days spent travelling, where a passenger passes through Customs, will be counted as a day in Britain. Those who spend more than 183 days in the tax year in Britain are deemed to be resident

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