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“Non-Doms” – What’s it All About?

Labour has announced plans to abolish the non-dom rules so that everyone who makes the UK their home pays UK tax.   

The non-dom tax rules currently allow those at the top to pay less tax through a special set of loopholes. Someone who claims ‘non-UK domicile’ (non-dom) status currently pays no tax on income and gains they make outside the UK, even if they make the UK their home.  

 

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Labour is of the view that these rules are unfair. Working families have to pay tax on all of their income and gains, wherever it comes from. Wealthy non-doms can live in the UK for many years, but avoid paying UK tax on their income and gains made abroad.  

Labour will: 

  • Abolish the non-dom rules so that everyone who makes the UK their home pays tax in the same way 

  • Introduce rules for temporary residents so that only those in the UK for a short period – for example to study or through their work – would be just taxed on income and gains in the UK 

  • Consult on the length of time for which the rules for temporary residents should apply and the length of time for current non-doms to re-arrange their tax affairs 

 

Non-Doms - Fact and Fiction: 

How many will be affected by these changes? 

  • There are around 116,000 non-doms in the UK 

  • Around 50,000 choose to pay tax on the ‘remittance basis’ which allows them to keep offshore income and gains out of UK tax  

  • Some of these will be ‘temporary residents’ under our new rules 

 

How much will this raise?  

  • These changes will raise hundreds of millions of pounds in additional tax from people claiming to be non-doms  

  • But people genuinely coming to the UK to work or study for a short period will not be deterred from doing so. 

 

Will this mean wealthy business people leaving the UK, damaging the UK economy?  

  • Some people said that there would be an exodus of non-doms when charges were introduced on them in 2008, but that did not happen 

  • Other countries do not have the equivalent of non-dom rules. They tax everyone who chooses to make their permanent home in their country in the same way and they have to pay tax in that country on their worldwide income.  

  • New York has a higher proportion of millionaires than London, and US residents pay tax on their worldwide income  

  • This will help the UK economy because the UK will only succeed when working people succeed, and that means everyone playing by the same rules. 

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