BUDGET EXTRA: Non doms status to be reviewed
Gordon Brown has bowed to pressure and set up a review into the controversial non-domicile rules that give tax breaks to foreigners living in the UK.
The move will be seen as a stalling tactic to relieve pressure from the Labour party, which has received donations from prominent ‘non-doms’ including Lakshmi Mittal, the steel tycoon.
But any change to the tax status of wealthy foreigners could be harmful to the UK economy according to tax experts.
Loughlin Hickey, head of tax at KPMG, said the combined affect of a review of the tax rules and the increase in national insurance contributions would make the UK a less attractive location for top business people.
He said: ‘There will be concern that these measures will make the UK a less attractive place to locate to in the longer term.’
Previous attempts to reform the rules have met with such fierce opposition that governments have backed off from making any changes.