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What does Hunt have up his sleeve for non-doms?

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The Chancellor’s Budget speech is going to be mildly intriguing, but the Imprudent Accountant is far from convinced that Jeremy Hunt will remove tax benefits from non-doms.

4th Mar 2024
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In the normal run of things, the UK electorate barely notices a Budget. At best, they might moan for 24 hours about increases in the cost of booze and fags and then get on with real life.

The 2024 Spring Budget was showing every sign of being even more of a non-starter than usual, given that Jeremy Hunt has already strongly hinted that, like London buses, there will be another one along very soon.

Many of us will have been delighted to hear that tax cuts were on the way but less so when, utilising a U-turn that was even quicker than usual, Hunt reined back on the promise. Since then, he has been a veritable merry-go-round, giving the general impression of desperately casting around for anything to assuage the Braverman brigade, while understandably showing concern about the source of money to pay for any cuts.

Unattributed leaks

As has become standard, the Chancellor of the Exchequer has issued a series of unattributed leaks to friends in the media, effectively testing out public opinion about some more or less likely proposals.

Last Thursday, he finally managed to wake this accountant up by hinting that the Conservative Party was contemplating the abolition of the tax reliefs that benefit individuals who are not domiciled in the United Kingdom.

It is worth emphasising that it is the Conservative Party doing this, since they have regularly ridiculed Rachel Reeves, who has long been of the view that this tax is unfair and its abolition could bring in much-needed funds for the NHS.

In theory, such a change could bring in £3.6bn every year, according to research by Warwick University and the London School of Economics. However, as Conservative activists have long opined, the net figure will most certainly be considerably lower if some incensed non-doms left the country.

Rare birds

According to HMRC, there are only 68,000 of these rare birds and I wonder how many of them are actually able to vote in the general election?

Of the 68,000, only 13,600 were non-resident – a paltry 2,100 paid for the privilege through the remittance basis charge with a mere 500 of those paying an enhanced £60,000.

These loss statistics hardly come as a surprise, since to benefit folk need to derive significant amounts of income or gains from overseas, have the wherewithal to leave the money offshore and pay a hefty charge for the privilege of saving even more.

Thus, Jeremy Hunt is effectively proposing to levy a very heavy tax on a handful of extremely wealthy individuals many of whom are likely to be strong supporters of his party and may well directly or indirectly provide a material chunk of its financing.

Political posing

I have a feeling that what is actually going on here is unsubtle political posing and Mr H has no intention of taking this forward.

However, if that is the strategy, it could backfire badly. In the shoes of Reeves, I would be desperately hoping that he drops the plan. The last thing that she needs is the current government stealing her best ideas. Additionally, should Labour win the election, they could reasonably introduce the change, explaining that it had been endorsed by Hunt.

I can’t be the only person in the country who believes that abolishing this archaic tax relief will be good news. While it has undoubtedly attracted a small number of individuals to the UK, those who leave as a result of abolition are probably not people that we want to know anyway.

In addition, a fair proportion of the largest prospective contributors might well be undesirables who are sanctioned, or should be.

Even the accountancy profession will probably not notice the difference, since very few of us will have advised significant numbers of non-doms about taking advantage of the arrangement in recent years.

Scattergun tax

Given the state of public finances, taking a bit more tax from a minuscule number of ultra-rich people benefiting from a scattergun tax that is randomly distributed seems a much better bet than introducing yet another stealth tax.

Then again, if Reeves really is already directing the government’s fiscal strategy, perhaps Hunt will not only take a crack at non-doms but hit the jackpot by bringing capital gains tax rates in line with income tax and applying VAT to fees at public schools.

I will not be viewing the Chancellor’s Budget speech from the edge of my seat but this one is going to be mildly intriguing, since it will require even more smoke and additional mirrors to bring in anything that the public even notices, let alone appreciates, and I don’t think that Hunt is enough of a magician to do that kind of conjuring.

Replies (4)

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By AndyC555
05th Mar 2024 14:03

"£3.6bn every year, according to research by Warwick University and the London School of Economics"

My understanding is that this figure ignored behavioural changes and the effects of DT treaties, putting the estimate in the realms of RM fantasy figures on tax collection.

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Replying to AndyC555:
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By Justin Bryant
05th Mar 2024 15:23

It's complete baloney. See: https://www.accountingweb.co.uk/any-answers/why-labours-ps32bn-non-dom-t...

It's all obviously 100% political.

Not sure why my council tax idea is not being implemented. See: https://www.accountingweb.co.uk/community/blogs/rebecca-cave/how-can-the...

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Replying to Justin Bryant:
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By FactChecker
05th Mar 2024 16:37

I'd be all for it, in principle, but such a simple idea would no doubt get wrapped in so much swaddling as to make it less easy to administer (although still worthwhile):
- an SDLT-like rule to allow repayment of the extra that was only incurred during a defined period when house selling/buying occurs in the 'wrong' order;
- no wriggle-room for those married couples who keep posting on here about how they don't actually live together and so own separate properties;
- conversely (and now it gets really tricky) some means of ensuring that lack of a marriage certificate doesn't give all those living 'as if' married an easy escape ...

Maybe make 'election of PRP' something that has to be done in advance - with a direct connection to any election made of 1st vs 2nd property for your proposal?

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