UK-BASED non-doms have paid ten times more tax than the average taxpayer, raising concerns over the Brexit impact on non-dom contributions and therefore, the economy.
Fiona Fernie, Partner and Head of Tax investigations at Pinsent Masons, comments: “Non-doms make a highly valuable contribution to the UK economy and any substantial exodus could have serious long-term impacts. Many are highly successful entrepreneurs and in the business sector meaning they establish or invest in UK-based companies, thereby creating thousands of jobs. Policymakers need to consider what they might lose by placing the status under threat.”
In government reforms from April 2017, long-term non-dom status will cease to exist and any non-dom taxpayer resident 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. For them, the remittance basis of taxation will no longer apply to non-UK income and gains. In addition, all UK residential property owned via an offshore company or other structure will be subject to UK IHT.
In total, £6.57 bn in income tax was contributed by non-doms between 2014 and 2015, highlighting the significant contribution which the group makes to the UK economy. The Revenue collected an average of £56,589 per non-dom in income tax over the year, compared to the average £5,152 collected per the remainder of the population.
Average income tax collected per non-dom significantly higher than rest of population over last year
There are concerns, from global law firm Pinsent Masons, that this substantial tax revenue, as well as other benefits brought by wealthy non-doms based in the UK, such as investment and job creation, could be lost. The government’s proposed changes to the status regarding Brexit could prompt too many to leave the country over the next few years.
Fernie concluded, “Removing [the availability of non-dom status] or altering it now, especially in the wake of uncertainty generated by Brexit, will mean many look seriously at relocating.”
Signed into law by president Barack Obama in 2010, the Dodd-Frank legislation has tightened regulation of the US financial system
Just when SMEs thought they knew the lie of the land in terms of the Brexit timescale, Theresa May has caught them by surprise. Salvador Amico of Menzies asks how SMEs should react to the news of a snap election on 8 June
With the general election on 8 June, CIOT has warned against rushing through extensive legislation without adequate scrutiny and an appropriate timeframe to make necessary amendments
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal