UK loses 16,000 non-doms in one year

The number of non-domiciled taxpayers in the UK fell by 16,000 between 2007/08 and 2008/09, according to official figures – and tax specialists at the law firm McGrigors have claimed that the exodus was sparked by the £30,000 annual levy introduced by the previous government.

The 11.5% reduction in the number of non-doms from 139,000 to 123,000 appears to confirm fears that the levy would spark an exodus of millionaires, said McGrigors director Phil Berwick, whose company obtained the data under the Freedom of Information Act.

‘We can only hope that this outflow does not continue… The spending power that has been lost to the UK economy is surely going to be far in excess of the income gained by the Treasury.’

The impact of the recent banking crisis and the decision by some non-domiciled individuals to accept taxation of their overseas earnings accounted for only a small fraction of the overall reduction in non-doms, said Mr Berwick.

He added: ‘Sometimes, non-domiciles are portrayed as yacht-bound oligarchs, but that is a very misleading cliché. Regardless of the spending power they bring, their skills and expertise have made them a very important component of the UK’s competitive edge.

‘Politicians should avoid the temptation to start using non-doms as a cash cow.’

The reasons for the fall in numbers was not as simple as McGrigors has insisted, said George Bull, tax partner at Baker Tilly. The annual remittance-basis charge would have been just one of several factors.

‘From 2008/09, individuals have only had to tick the “non-dom” box on their tax returns,’ Mr Bull remarked. ‘That includes people who are claiming the tax benefits of non-domicile status, or who fall into one of the other relevant categories, such as having less than £2,000 worth of overseas income and gains.

‘But all of those who chose to pay UK tax on their overseas income and gains – because the resulting tax liability is less than the £30,000 remittance basis charge –  will not have been required to tick the box. That could well account for a large proportion of the 16,000.

‘The issues here are very serious, but it is important not to overstate the scale of departures,’ he added.

Categories: News , Residence & domicile