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Burn down the broken non-dom regime | accountingweb

Burn down the broken non-dom regime


Dan Neidle, founder of Tax Policy Associates, argues that abolishing the non-domicile rules would raise £2.5bn and make the UK tax system fairer and more transparent.

10th Oct 2022
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Rebecca Cave spoke to Dan Neidle about his latest policy paper on reforming the non-domicile regime.

Why were you prompted to review the non-domicile regime?

There was a bit of a kerfuffle earlier this year around the then-Chancellor’s wife and her non-domicile status. It was apparent that many people don’t understand how the non-domicile regime actually works, so I blogged in a nerdy way about how oligarchs can avoid UK tax. For balance I also explained how normal migrants are taxed and what would happen if the non-dom regime was removed

Would removing the tax exemptions in the non-dom regime raise more tax, or would wealthy non-doms vote with their feet and stay away from the UK? 

The CAGE research group at Warwick University recently produced this paper which quantified the benefits of abolishing the non-dom rules. They estimate this would bring in an extra £3.2bn of income tax and capital gains tax revenue. That would be reduced by £210m if we keep the rules for the first year after someone arrives in the UK, and £860m if we keep the rules for the first three years. 

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Replies (6)

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By Justin Bryant
10th Oct 2022 14:17

But a lot of these mega rich non-UK domiciled people would/could presumably then just limit their UK midnights to 90 (or whatever their SRT maximum is). Has DN considered that in his calculations (especially in this era of so-called hybrid working)?

Also, their UK residential property is already in the IHT net (regardless of EPTs), which the above article overlooks (other UK investments can be easily made IHT-free as for UK doms as he knows).

Overall, this does not look like fair and impartial commentary to me (I guess it wasn't meant to be).

Thanks (0)
Replying to Justin Bryant:
By ireallyshouldknowthisbut
10th Oct 2022 15:14

@Justin, my experience from discussing this area with clients is that they will change behaviours based on the tax, BUT only around the edges.

Whilst hardly in the mega rich category myself, being internationally mobile family, tax is a minor consideration in where you live or want to spend your time.

I think this fear or 'but they will all leave' is widely overstated personally, and more about the non-doms telling a good story to preserve their tax breaks than anything. Yes some will go, but more than made up for by the taxes levied on those who remain.

Those who's prime motivation is low taxes wont live in the UK in the first place, people live in the UK as they want to be here more than they want to be other places.

Thanks (0)
Replying to ireallyshouldknowthisbut:
By Justin Bryant
10th Oct 2022 16:23

But see:

My point is that DN overlooks that kind of simple SRT planning (for the very rich) in his calculations and my IHT points above.

Thanks (0)
By Paul Crowley
10th Oct 2022 17:03

Domicile really is an out of date concept
It should have no bearing on tax
And there should be no Non Dom or green card holder MPs

Thanks (4)
Replying to Paul Crowley:
By Justin Bryant
10th Oct 2022 17:17

So what would you base IHT on (apart from UK situs)? You'd have to re-write IHTA 1984.

Thanks (0)
By billgilcom
12th Oct 2022 21:47

“I’d offer an attractive deal to non-doms: tax all of their offshore income and gains going forward, but let them bring all historic assets, income and gains into the UK without paying a remittance charge”

Lost all credibility with that comment!! Little green eyes strikes again. Pre-UK historic assets and gains are not taxable in the U.K.

Non-Dom was dreamed up by the parliament (and rule makers) to bring wealth into this country and has been tightened up as people have become more and more centred on perceived unfairness egged on by media and people who are always looking at what others have and whinging about their own lot.

Now I suppose I’ll have to expect the comments that say I’m wrong and mistaken

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