Non-doms paying ten times more in income tax than average taxpayers

The new data shows that the Revenue collected an average of £56,589 per non-dom in income tax over the year, compared to the average £5,152 collected per the remainder of the population.

Pinsent Masons says there are concerns that this substantial tax revenue, as well as other benefits brought by wealthy non-doms based in the UK, such as investment and job creation, could be lost if the government’s proposed changes to the status prompt too many to leave the country over the next few years.

The firm explains that from April 2017, government reforms mean that long-term non-dom status will cease to exist and any non-dom taxpayer resident in the UK for 15 or more out of the last 20 years will be deemed domiciled for income tax, capital gains tax and inheritance tax purposes. For those people, the remittance basis of taxation will no longer apply to non-UK income and gains. In addition, all UK residential property owned via an offshore company or other structure will be subject to UK IHT.

The total number of UK taxpayers indicating a non-domiciled status on their tax returns reached 116,100 in 2014/15 up by 2 per cent from 114,300 the year before.

5,000 non-doms also paid £223 million in the remittance based charge (non-dom levy) in 2014/15 on their overseas incomes, the same sum collected in 2013/14.

Pinsent Masons point out that non-doms also pay significant amounts in CGT and transactional taxes such as VAT.

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.

“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.

“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.

“New York, Hong Kong and other major financial centres are always looking to attract these people, and will be keen to show they can offer a better deal. Many non-doms are internationally mobile and will not hesitate to move if the grass looks greener. Dismantling the tax status will do little to keep them here in the UK.”