Labour plans to scrap non-dom status

THE NON-DOMICILE rule would be abolished under a Labour government, the party has confirmed.

The “arcane” rules allow UK residents pay tax on their UK income, but deem their permanent home to be outside the UK. They therefore do not have to pay UK tax on foreign income as long as they do not transfer it into the UK – or they pay a charge of at least £30,000 instead of a full assessment.

Labour says it is “uncertain” how much money the abolition would raise, which would affect an estimated 115,000 people, but claimed it would be “hundreds of millions of pounds in additional tax revenues”.

Famous examples include Chelsea FC owner Roman Abramovich and HSBC group chief executive Stuart Gulliver, while former Conservative deputy chairman Lord Ashcroft gave up the status in 2010 to keep his place in the House of Lords after a change of law. Labour donor Sir Gulam Noon has also held the status in the past.

But Labour described the rules as “ridiculous” in a statement on its website. It pointed out the status can be claimed by people who were born in the UK, but whose fathers were not. No equivalent provision is made for those whose mothers were born outside the UK. Meanwhile, people born and brought up in the UK, who have lived abroad for a while and then moved back, can pay tax as non-domiciles by claiming they plan to move abroad again in future.

The party added that “most other countries” require people who live there to pay tax on their worldwide income and gains, citing the example of the US.

The Conservatives claimed the policy is “confused” and that the rules had raised more money under the current government than in any previous.

In the Autumn Statement last year, George Osborne announced a £90,000 charge for people who are non-domiciled in the UK for tax purposes but have lived there for 17 of the past 20 years.

The previous Labour government brought in a £30,000 charge for non-doms resident in the UK for seven of the previous ten years.

Under Labour’s plans, nobody new would be able to claim non-domicile status, while current claimants would have a five-year window to amend their tax affairs.

In a speech to be given today by Ed Miliband (pictured) at the University of Warwick, he will say: “There are people who live here in Britain like you and me, work here in Britain like you and me, are permanently settled here in Britain, like you and me, but aren’t required to pay taxes like you and me because they take advantage of what has become an increasingly arcane 200-year-old loophole.”

“I want to be clear. I don’t blame people for taking advantage of non-dom status. I blame governments for fostering a system that can be taken advantage of.”

George Osborne told the BBC: “Either they are going to abolish non-dom status altogether which would cost our country hundreds of millions of pounds in lost tax revenues and lost investment – the reason they did nothing on this during thirteen years in office.

“Or they are just tinkering around the edges and making small adjustments to the rules on how long people can be non-dom. This confusion is another reminder of why they can’t be trusted with our economy.”

The Liberal Democrats have also pledged to increase the charges non-doms face.