Tax from non-doms falls by £2bn as wealthy flee the UK
The number of wealthy residents who pay no UK tax on their offshore accounts has fallen to its lowest level ever, Treasury figures reveal.
Last year, there were 78,300 non-domiciled taxpayers, or “non-doms”, in the UK compared with 98,500 in 2016-17.
And the £9.5bn they paid to the taxman in 2016/17 fell to £7.5bn last year.
The majority of non-doms are rich UK residents whose permanent home is outside Britain. For example foreign bankers who work in the City can have non-domiciled status and avoid UK taxes on their income from outside Britain.
HMRC said that of those who stopped using non-dom status, about half switched to domiciled status and continued to pay tax in the UK while half left the British tax system altogether.
While the HMRC are claiming this represents success based on people giving up their non-domiciled status to become domiciled yet resulting in no loss of revenue for the Exchequer, commentators have said that it also shows foreigners are being dissuaded to come to the UK.
International law firm Pinsent Masons said the reason was Brexit and nervousness over the chances of a Labour government. The firm’s senior tax manager Josie Hills said: “Non-doms are internationally mobile and if the UK is no longer an attractive place for them, then they can easily relocate.”
Hills added “Brexit uncertainty” was driving out many of the wealthiest non-doms, as they were “not prepared to hang around to find out the outcome”.
She said: “The prospect of a Labour government is also very unappealing for high net worths – talk of monetary controls and wealth taxes are not well received. Given that there could be a general election in the near future, many will not be willing to take the risk that this becomes a reality.
They pay HMRC a “non-dom levy” of between £30,000 and £60,000, which allows them to pay no tax on offshore income and capital gains, unless the money is brought into the UK.
Revenue from that levy was £315m last year.