Billions in tax revenue risked by changing non-dom taxpayer rules
19 September 2016
According to a report by Law Firm Pinsent Mason, the UK Government is putting billions of pounds of tax revenue at risk by changing rules governing non-domiciled taxpayers.
Pinsent Masons also said that proposals to scrap non-dom tax status for people living in the UK long-term, due to come into force in April 2017, could prompt many wealthy residents to leave.
Fiona Fernie, partner and head of tax investigations at Pinsent Masons, said: "Non-doms make a highly valuable contribution to the UK economy and any substantial exodus could have serious long-term impacts.
"Policymakers need to consider what they might lose by placing the status under threat."
"The availability of non-dom status awards the UK a real competitive advantage when it comes to attracting wealthy and talented individuals.
"Removing or altering it now, especially in the wake of uncertainty generated by Brexit, will mean many look seriously at relocating."
Non-dom taxpayers contributed £6.57 billion in income tax in 2014/2015, averaging out at £56,589 per person compared with the £5,152 collected from regular residents."As a group, non-doms pay billions in tax and bring huge combined spending power, skills and valuable connections to the UK.
"Many are highly successful entrepreneurs and businesspeople, meaning they establish or invest in UK-based companies, thereby creating thousands of jobs," Ms Fernie added.
It is estimated that 116,100 people in the UK currently qualify as non-dom taxpayers.
Current proposals would scrap non-dom tax status for people living in the UK for at least 15 out of the last 20 years, forcing them to pay regular rates of income tax, capital gains tax and inheritance tax.
Any UK residential property owned via an offshore company would also be subject to UK inheritance tax, Pinsent Masons explains.
The Treasury issued a consultation paper setting out the terms of its proposed changes on the 19th August. The changes are due to take effect from 5th April 2017.
A spokesman for the Treasury said: "The UK is open for business and we will remain a top destination for talented people who want to invest and create jobs in this country.
"It is only fair that those who choose to live in the UK for a very long time pay their fair share of tax to help fund the public services we all rely on."