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The Government is biting the hand that feeds them by driving non-doms away, as they contribute to a large chunk of the UK’s overall tax take, say leading audit, tax and business advisory firm, Blick Rothenberg.
Robert Salter, a Director at the firm, said: “The Government’s recently published statistics for the 2023/24 UK tax year show that approximately 83,000 taxpayers claimed ‘non-domiciled’ status for the year ended 5 April 2024 0.2% of the income tax paying UK population.
“However, these individuals contributed almost £12.5bn to HM Treasury via income tax, National Insurance Contributions (NIC) and Capital Gains Tax (CGT) in the year.
“If the UK were to lose this revenue from the non-doms, and there are some clear signs that many non-doms are leaving the UK, at least in part because of the removal of the non-dom regime and the increased risk that they could become liable to UK Inheritance Tax (IHT) it would take a 1.5p increase in the basic rate of income tax payable by regular taxpayers to fully ‘recover’ the potential losses from the departure of non-doms.
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In addition to the direct personal taxes which the non-dom population has contributed to the UK, these individuals have also been paying billions more into the UK economy through VAT on the products & services they buy in the UK, while their companies in the UK will be paying significant amounts in UK corporation tax too.
The government is being warned that the tax changes could drive away non-doms and they could keep “their foreign income and gains outside the UK.”
Salter admits there was “certainly some flaws” to the non-dom regime, but the government is risking further wealthy individuals fleeing the UK.
He added, “If the tax changes introduced by the Government do drive the non-dom population away the Government will not just lose the income tax, CGT and NICs mentioned above, but some of the receipts from these additional taxes too.
“While there were certainly some ‘flaws’ with the UK’s non-dom regime, such as the fact that it rewarded non-doms for keeping their foreign income and gains outside the UK, it was a significant factor in attracting executives and High Net Worth Individuals here. The removal of this tax regime may mean that the UK economy will suffer significant losses, both in tax receipts but also in wider economic investment over the coming years.”
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