The amount of income tax paid by so-called “non-doms” based in the UK has risen by seven per cent, according to a new report out today from Pinsent Masons, the global law firm.
According to the report, non-doms – individuals claiming certain tax benefits because their permanent home is outside of the UK – paid £6.6bn in income tax for the 2013/2014 year, compared to £6.18bn in 2012/2013.
Pinsent Masons also found that the total number of UK taxpayers claiming non-domiciled status had increased, from 110,700 individuals in 2012/2013 to 114,3000 in 2013/2014.
The firm added that non-doms “also pay significant amounts in capital gains tax and transactional taxes such as VAT”, cautioning that the taxpayers’ “considerable contribution to the UK economy” could be “put at risk f the erosion of non-doms’ special tax status announced in July’s budget encourages many of them to leave the UK”.
Chancellor George Osborne said in the summer budget that long-term non-dom status would be abolished from April 2017.
Under the government’s proposals, any non-dom taxpayer residing 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.
The change is set to specifically hit non-doms whose status has been inherited based on the country their fathers considered their permanent homes.
Fiona Fernie, head of tax investigations at Pinsent Masons, was highly critical of the proposed changes, saying, “each year non-doms contribute a far greater amount to the UK exchequer than many realise, and in the last year that contribution has in fact risen.”
She added: “Changes announced in the budget have led many non-doms to re-assess their position – a large proportion are internationally mobile and will not hesitate to re-locate if a better deal can be found elsewhere.”