Tax expert Jason Collins of Pinsent Masons said that the figures showed that the UK tax system was perceived as “becoming increasingly hostile” to high net worth individuals (HNWIs), particularly those from overseas
The number of individuals resident in the UK for tax purposes who are not domiciled here has fallen by almost a fifth since 2008, when HM Revenue and Customs (HMRC) introduced a new charge on those individuals, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com.
Tax expert Jason Collins of Pinsent Masons said that the figures showed that the UK tax system was perceived as “becoming increasingly hostile” to high net worth individuals (HNWIs), particularly those from overseas. The number of taxpayers registered to pay the annual remittance basis charge on non-domiciled taxpayers fell by a further 2,000 over the tax year ending 31 March 2011, and has dropped by 17% since the levy was introduced in 2008.
‘Domicile’ is a complex concept that that has been defined by a long line of cases and means essentially where a taxpayer has his or her permanent home. Domicile is distinct from both nationality, and place of residence in a given tax year. Individuals who come to the UK from other countries will usually be non-UK domiciled unless they intend to live here permanently and indefinitely.
“There is a conflict here with the Prime Minister’s promise to roll out the red carpet for wealthy foreigners, and it is also potentially undermining new tax rules introduced in 2012 to attract non-dom investment in UK businesses,” Collins said. “The levy is part of a series of measures, both implemented and threatened – including the annual property tax and mansion taxes, the 50/45p tax rate and capital gains tax increases, which are driving highly mobile wealthy individuals from the UK.”
“Non-doms are more important to the UK economy now that ever before. They have a choice about where to live. They have huge spending power, invest in businesses and create jobs. They can’t do this if they aren’t here – and there are plenty of other countries competing to welcome them to their shores,” he said.
Introduced in 2008, the remittance basis charge was originally set at £30,000 a year for all non-domiciled taxpayers (‘non-doms’) who had been in the UK for seven years or longer. In April 2012, the charge was increased to £50,000 a year for those who have been in the UK for 12 years or longer, while those resident in the UK for between seven and 12 years remain subject to the annual £30,000 charge. Non-doms can opt out of the levy if they agree to pay UK tax on their worldwide income and gains instead.