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Politics: Inexplicable non-dom status should be abolished


By David Porter

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On St Andrew’s Day last week, the House of Commons sat down to debate and discuss the Finance Bill - still against a backdrop of problems with our energy security, the climate crisis and the cost-of-living crisis.

Sadly, despite the rapid turnover in personnel in recent weeks and months at No. 10 and No. 11 Downing Street, there are still no signs in this Bill that the UK Government have any inclination to go about getting to grips with those three crises and challenges of our age.

Chancellor Jeremy Hunt
Chancellor Jeremy Hunt

The theme of the Chancellor’s autumn statement, in as much as it had one, was fiscal consolidation, through a combination of fiscal drag and - where there were not direct spending cuts - spending increases in cash terms only, which failed to keep pace with inflation and therefore represented cuts in real terms.

I have pointed out previously that there were a few measures the Chancellor could have taken if he genuinely wished to place the burden of an increased tax take on the shoulders of those best able to carry it.

Non-domiciled UK residents – “non-doms” – are a very obvious starting point. According to the London School of Economics, the UK’s non-doms receive at least £10.9 billion-worth in offshore income and capital gains each year, which they are not required to report to His Majesty’s Revenue and Customs or to pay tax on in the UK.

Instead, those who enjoy that status can pay an annual charge of either £30,000, if they have been here for at least seven of the previous nine tax years, or £60,000, if they have been here for a least 12 of the previous 14 tax years. Those are inconsequential sums, given what would, in most cases, have had to have been paid if those earnings had been subject to UK rates of taxation.

This anomaly originates from Britain’s colonial history, and those with that status are entitled to claim a special tax treatment not available to ordinary taxpayers on this “remittance basis”.

That means that even though they might spend most of their time in the UK, and might even have lived here for several years, unlike other UK residents they can avoid paying tax on their investments by locating them offshore.

It has been estimated that if this loophole had been closed, £3.2 billion would have been raised for the public purse.

It is inexplicable that this status is still allowed to exist, although you and I may have our views as to the reasons for this.

The Bill also deals with Windfall Taxes and, while such taxes have their place, they are being applied in a disjointed manner across the energy sector.

The fact that the Government seem to have given no consideration to applying a similar tax on other industries, outside of energy, that are also experiencing significant increases in profits as a result of current market conditions is of concern.

All in all, the Finance Bill misses so many opportunities to meet the trials of the present.

It does not set us on the course we should be trying to set ourselves on to meet the challenges of the future.


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