Rishi Sunak with his wife, Akshata Murty, who gave up her ‘non dom’ status (Ian West/PA)
(Picture: PA Wire)The number of registered non-dom taxpayers in the UK has slumped by almost half over the past seven years new research reveals today.
The total who qualify for the benefits of non-domiciled status - which allows them to shelter offshore earnings and wealth from UK tax while living in Britain - has dropped from a peak of 123,000 in 2015 to 68,300 last year.
The study from tax and accounting specialists RIFT Tax Refunds blames the impact of Brexit and changes to the regulation of non-doms for the slide.
The trend showed no sign of slowing over the past year with a 10.7% annual drop in the number of non-doms, who overwhelmingly live in London and the southeast.
The non-dom loophole - which dates back to the late 18th century when many wealthy British owned property in the colonies - allows taxpayers who live in the UK to declare their long-term “domicle” to be overseas. Their foreign wealth and income is then exempt from UK tax so long as it is not brought onshore.
The controversial non-dom status hit the headlines earlier this year when it emerged that Akshata Murty, the multi-millionaire wife of then Chancellor Rishi Sunak, was a beneficiary.
It meant that she would not have had to pay tax on the dividends she received from the Indian tech firm Infosys founded by her father, so long as she did not repatriate them to Britain.
The regime regulating non-dom status was overhauled after the financial crisis when an annual charge was introduced, and again in 2015 by another former Conservative Chancellor George Osborne when he abolished it for people who had been in the UK for more than 15 of the last 20 years.
However, the tightening has also been criticised by making Britain a far less welcoming environment for foreign wealth creators.
Bradley Post, CEO of RIFT Tax Refunds, said: “The number of non-doms within the UK has steadily been declining since 2015 and this has been largely due to changes to tax structures for non-domiciled taxpayers which were first consulted on in 2015 before their implementation in 2017.
“Their aim was to prevent many wealthy foreign nationals from taking advantage of the benefits of UK residency, while paying very little in taxes. This has clearly had the intended effect, with the level of both income tax and national insurance paid by non-doms declining notably, while it appears many have also offloaded their permanent ties to the UK with a sizeable spike in capital gains tax paid.
“The EU Referendum and our exit from the EU in 2020 have no doubt contributed to this continued trend. However, with the economic outlook now looking rather bleak, to say the least, the tax that non-doms do contribute to the economy, as well as the money they spend while residing here, may well be missed.”
