Gordon Brown May Back Off Changing Non-Domicile Tax Status

by Jason Gorringe, Tax-News.com, London

15 April 2003

Recent reports suggest that British Chancellor Gordon Brown may leave intact a tax loophole which benefits around 100,000 wealthy foreign individuals working in the UK.

British tax law at present leaves non-domiciled foreign nationals exempt from paying tax on income generated overseas. A recent discussion paper published by the Treasury had suggested ways in which this system could be reformed.

"The Government values a dynamic and open economy, and supports the international interchange of skills and expertise. However, the current rules determining residence and domicile have developed over the past 200 years, are complex and poorly understood, and do not reflect the reality of today’s more integrated world," the Treasury discussion paper explained.

Mr Brown is facing mounting pressure from those on the left of the Labour Party to close the tax loophole and bring these non-domiciled people into the tax net, as according to estimates, over three quarters of them have incomes in excess of £100,000 per year.

However, others such as Alex Henderson, tax expert at PricewaterhouseCoopers, have suggested that the Chancellor is less than keen to close the loophole for fear of upsetting the financial services community.

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