This substantial tax revenue, as well as other benefits brought by wealthy non-doms based in the UK such as investment and job creation, could be lost if the government’s proposed changes prompt too many to leave the country, said tax investigation expert Fiona Fernie of Pinsent Masons, the law firm behind Out-Law.com.
The figures come from a recent survey by Pinsent Masons, looking at the contribution that non-doms make to the UK economy.
Long-term non-dom status is due to cease to exist from April 2017 and any non-dom taxpayer resident in the UK for 15 or more out of the last 20 tax years will be deemed domiciled for income tax, capital gains tax (CGT) and inheritance tax (IHT) purposes. For those people, the remittance basis of taxation, where people only pay UK tax on foreign income or gains when it is brought into the UK, will no longer apply. In addition, all UK residential property owned via an offshore company, or other structure will be subject to UK IHT.
The total number of UK taxpayers indicating a non-domiciled status on their tax returns reached 116,100 in 2014/15, up by 2% from 114,300 the year before. 5,000 non-doms paid a total of £223 million by way of the remittance based charge, a levy on those non-doms seeking to benefit from the remittance basis of taxation, in 2014/15, the same sum collected in 2013/14.
Non-doms also pay significant amounts in CGT and transactional taxes such as VAT, said Fernie.
"Non-doms make a highly valuable contribution to the UK economy and any substantial exodus could have serious long-term impacts. Policymakers need to consider what they might lose by placing the status under threat," she said.
"As a group, non-doms pay billions in tax and bring huge combined spending power, skills and valuable connections to the UK. Many are highly successful entrepreneurs and businesspeople meaning they establish or invest in UK-based companies, thereby creating thousands of jobs. The availability of non-dom status gives the UK a real competitive advantage when it comes to attracting wealthy and talented individuals. Removing or altering it now, especially in the wake of uncertainty generated by Brexit, will cause many to look seriously at relocating," Fernie said.
New York, Hong Kong and other major financial centres are always looking to attract wealthy people, and will be keen to show they can offer a better deal, she said.
"Many non-doms are internationally mobile and will not hesitate to move if the grass looks greener. Dismantling the tax status will do little to keep them here in the UK," Fernie said.