Number of non-doms rise ahead of likely abolition of regime
Number of non-doms rise ahead of likely abolition of regime
New figures released today show the estimated number of non-domiciled taxpayers rose to 74,000 in the tax year ending 2023 ahead of the likely abolition of the non-dom regime.
This was a slight rise over the 68,900 people claiming non-dom status in the tax year ending 2022. The year-on-year increase is partly explained by a continued recovery in new arrivals post-Covid.
The overall tax take (a combination of Income Tax, CGT and National Insurance contributions) was roughly flat at £12.3bn.
Elsa Littlewood, a private client tax partner at BDO said:“The incoming Labour Government plans to raise £5.2bn by closing what it calls ‘non-dom tax loopholes’ and investing in reducing tax avoidance. Today’s figures show that there is a growing number of people who will be affected by the Government’s proposed abolition of non-dom status.
“The abolition of the non-dom regime, which is really the abolition of the remittance basis of taxation, was initially proposed by the previous Conservative Government who predicted that their changes would raise £2.7bn per year by 28/29. The Labour manifesto made it clear that it too plans to abolish the remittance basis of taxation and replace it with a stricter regime than the one proposed by the Conservatives – although we don’t yet have full details.
“The Government now has an opportunity to design a regime which is fit for purpose in a modern world, attracting entrepreneurs, talent and overseas investment into the UK to support growth for UK plc. Whereas the original proposals from the previous Conservative government and the subsequent Labour announcements contain some sensible common-sense improvements, there are also a number of problems and potential missed opportunities.
“If these proposals are to be implemented from April 2025, we would expect the Government to launch a consultation soon to give sufficient time for effective scrutiny of the new rules and allow non-doms to consider their options.
“Those who currently claim non-dom status will want to keep a very close eye on policy announcements in this area and should be considering their options now. Those with assets or property in offshore trusts who may be brought into the scope of the UK’s IHT regime may need to pay particular attention.
“We have already seen several non-doms accelerate their plans to leave the UK and expect the numbers of departures to increase over the coming months. Of course, the very fact that they are non-doms means that they were going to leave the UK at some point; what is perhaps going to be more interesting is the impact a new regime will have on the numbers of people investing in and coming to work in the UK in the future.”
ENDS
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