Everything you need to know about non-doms: Who are they, what tax do they pay, why does Labour want to ban them

 
Guy Bentley
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Everything you need to know about Labour's latest target (Source: Getty)

Ed Miliband appears to be making the political weather today with his pledge to abolish non-domiciled tax status.

However, Ed Balls' warning back in January that abolishing the non-dom status could actually cost Britain money has come back to haunt Labour spinners.

Here are the basics of everything you need to know about non-doms and why they're making the headlines.

What is non-domiciled tax status?

Non-dom status can be claimed for those living in the UK whose father was resident in another country.

Labour supporter and steel tycoon Lakshmi Mittal is a non-dom as was.Tory peer Michael Ashcroft, who renounced his non-dom status in 2010 to retain his seat in the House of Lords.

When was it invented?

William Pitt the Younger introduced non-dom status in 1799.

What taxes do they pay?

Non-doms are subject to the same UK taxes as ordinary citizens on their UK income. However, income that is earned abroad and not remitted to the UK is not taxed.

How much do you have to pay for non-dom status?

Non-doms resident in the UK for seven years have to pay an annual charge of £30,000. Those living in the UK for 17 years to will have to pay £90,000 per year, as a result of measures introduced in George Osborne's Autumn Statement.

What is Labour proposing?

Labour want to abolish non-dom status, but will allow a short period to allow people to adjust their finances and circumstances.

What's been the reaction?

Labour has said the move could raise hundreds of millions of pounds and is "morally" justified as an issue of fairness.

The Institute of Directors (IoD) took a radically different view. The IoD's director general Simon Walker said:

Attacking non-doms is a shrewd political move, but the economics of the proposed reforms are unconvincing. It’s very unclear what additional revenue would be raised, but the UK’s international reputation would be put at risk.

This country has benefited enormously from attracting some of the most successful businesses and entrepreneurs in the world, with the previous Labour government recognising the benefits of an internationally competitive tax system.

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