TaxPersonal TaxNon-domicile status up for review

Non-domicile status up for review

In what now seems an age-old government tradition, the Treasury has once again indicated that the tax treatment of non-domiciles could be changed in next month's Budget speech.

Link: Families urged to apply now for tax credits

But rather than press ahead with any changes, he is likely to invite discussion on reforms to the tax loophole that is taken advantage of by wealthy foreigners living on these shores, according to reports in the Financial Times.

Tackling the status of non-domiciled tax payers is difficult task for Gordon Brown and the Treasury. It is a fine balance between maintaining the UK as an attractive destination for foreign business people and making the tax system as fair as possible.

The FT reports that the most likely reform would require foreigners to start to pay tax on their overseas income if they stayed in Britain for a certain period. Whether this would be sufficient is arguable, however.

An estimated 60,000 people claim non-domicile status in the UK, and closure of the loophole could earn the Treasury as much as £1bn a year.

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