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One of the many interesting aspects of the Zahawi affair was his statement ‘I have never been a non-dom’. Given that he was born in Iraq to Iraqi-Kurd parents and came to the UK aged 11, not speaking a word of English, when his parents fled Saddam Hussein’s regime it seems beyond doubt that he was not UK domiciled at birth. Presumably at some point he acquired a UK domicile of choice – and as an MP he would automatically be deemed to be UK domiciled. Non-dom is now a such a term of abuse in public discourse about tax, so it is perhaps not surprising that he wanted to distance himself from the phrase, even at the expense of accuracy.
The broader perspective is worth noting here. In the 2021 census more than ten million people in England and Wales said that they were born abroad. Being born abroad doesn’t automatically meant that you are not domiciled here but it is probably a reasonable proxy for it. Certainly on any estimation there must now be many millions of non-doms in the UK. The vast majority of them will, of course, not be shielding foreign income from UK tax but will be working and paying tax here. So there is a disconnect between the perception of non-doms as rich tax avoiders and the reality of many of them being low earners working here for a few years to support their families back home.
We need to redefine the terms of the debate if we are ever going to get any sensible policy in this area. I feel fairly sure that the word domicile will disappear from the UK tax system – perhaps it will become as obsolete as the horse which used to feature in the travelling expenses rule.
If you do one thing...
Remind clients about the tax-free childcare scheme. This can be worth up to £2,000 per child per year for eligible working families in the UK (tinyurl.com/hmrcchildcare).
