“Non-doms” get a bad name for themselves in the press, for avoiding paying tax in the UK, on their income and capital gains.
There are persons who are considered to be “non-doms” living in the UK, who might be resident in the UK but whose domicile or permanent home is outside of the UK. A person’s domicile is usually the country his or her father considered his permanent home when he or she was born, or it may be the place overseas where somebody has moved to with no intention of returning. These people could be temporary workers, for example, or business men who have a temporary home in the UK but their business and family commitments are based outside of the UK.
For proof that they are not domiciled in the UK, the individual must provide to the tax authority, evidence about their background, lifestyle and future intentions, such as where they own property or intend to be buried.
The benefits of having a “non-dom” tax status is that an individual must pay UK tax on UK earnings, but need not pay UK tax on foreign income or capital gains unless they bring that income back to the UK. It tends to be a pre-notion of the British public that “non-doms” are wealthy individuals who don’t pay their way.
The Financial Times, on the 1st September issued an article discussing the financial contribution of non-doms on the British tax fund. HMRC has released information about the number of non-doms and how much they pay in tax. There were 121,300 non-doms in 2014-15 and together they paid a total of £9.3bn in income, national insurance and capital gains taxes. This shows that on average each individual paid about £105,000 in tax, which evidences how many of them pay tax on large amounts of income generated in the UK. This is actually an extraordinary amount of money!
In addition to the income tax and capital gains tax being paid, ever since 2008, people who have claimed non-dom status have been required to pay a remittance charge of £30,000, if they have lived in the UK for seven years of the last nine years, then £60,000 if they have lived in the UK for 12 of the previous 14 years. This has brought in a lot of revenue for HMRC, as the data showed that 5,100 non-doms paid the remittance charge in 2014-15. When you multiply the income made through the remittance charge, this is an enormous amount of money.
The most recent reform affecting the non-dom status, introduced in April 2017, abolished permanent non-dom status for anyone living in Britain for at least 15 of the past 20 years.
This is arguably, going to risk driving non-doms these people out of the UK, as there is hardly any benefit to living as a non-dom in the UK. Driving away non-doms will be detrimental to the UK economy. As evidenced, they bring in an extraordinary amount of money to HMRC but also the type of people who claim non-dom status tend to be wealthy multi-national business men who bring wealth and jobs and industry to the UK. The UK should be encouraging non-doms to stay, as even if they not paying income tax, they are paying for taxes such as stamp duty and company tax, for the properties they buy and companies they set up.
Sassa Karakatsianis, Immigration Specialist
September 13, 2017UK visa & immigration consultation
48 Warwick Street
London W1B 5AW
Tel: 020 7043 6026
Fax: 020 3384 0199