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UK Non-Dom Changes 'May Cause Exodus'

by Robert Lee,, London

14 July 2015

New figures show that 1.5 percent of UK non-domiciled individuals were born in the country, leading international law firm Pinsent Masons to deduce that this population is highly mobile and has strong ties overseas.

Chancellor George Osborne's Summer Budget included plans to remove "fundamental unfairnesses" in the non-domicile regime. The Government will abolish the permanent non-dom tax status, meaning that anyone resident in the UK for more than 15 of the past 20 years will have to pay full UK taxes on all worldwide income and gains. The Government will also introduce new rules to ensure that those who own residential property in the UK, and would otherwise pay inheritance tax on that property, cannot avoid paying inheritance tax by holding the property in an offshore structure. These changes will enter into force from April 2017.

In the 2012-13 tax year (the latest figures available), 110,700 taxpayers claimed non-domiciled status on their UK tax returns. Of these, 1.51 percent indicated that they were born in the UK but had never been domiciled there. In the same year, the number of taxpayers claiming non-domiciled status for the first time was 25,000. These figures suggest that the non-dom population is highly mobile, Pinsent Masons said.

The number of non-doms in the UK fell from 111,700 in the 2011-12 tax year. In 2012-13, there were 28,300 fewer non-doms than in the 2007-08 tax year, when the figure stood at 139,000.

Paul Noble, Tax Director at Pinsent Masons, commented: "These figures suggest that those coming to the UK as non-doms are likely to be very open to relocating elsewhere. The vast majority were not born in the UK, and may not have strong existing links when they arrive here."

"While we are seeing large numbers of wealthy people come to the UK and paying tax on a non-domiciled basis, we have also seen large numbers move away in the last five years, showing that they can and do move where the opportunities take them, taking their spending and investment with them."

TAGS: individuals | expatriates | inheritance tax | tax | investment | law | accounting | financial services | United Kingdom | offshore | services

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