Numbers of wealthy foreigners sheltering their riches in the UK have dropped by nearly a fifth since the introduction of new taxes aimed at siphoning off some cash in exchange for residence.
HM Revenue and Customs says that those who claim to be residing in the UK for tax purposes but not domiciled dropped since the charge was introduced in 2008, according to figures obtained by law firm Pinsent Masons.
Jason Collins, a tax expert at the firm, said that many high net worth individuals now viewed the UK’s tax system as increasingly unwelcome to those from abroad.
The term ‘domiciled’ defines where a taxpayer has their permanent home and is not linked to nationality or where their residence is in a given tax year.
Generally, the wealthy who moved to Britain from abroad are considered to as non-UK domiciled unless they plan to live permanently in the country.
Non-dom tax charge
Pinsent Masons says that the number of non-domiciled taxpayers in the UK has dropped by around 17% since the annual remittance charge was introduced.
That’s when a £30,000 charge was brought in for non-doms who had lived in the UK for at least seven years, and the levy was increased last year to £50,000 for anyone living in the country for 12 years or more.
Those who had been living in UK for between seven and 12 years are still subject to the yearly £30,000 charge.
Non-doms opting to pay UK tax on their worldwide income can opt out of the levy.
Mr Collins said: “The levy is part of a series of measures, which includes capital gains tax increases, mansion taxes, the annual property tax and the 50/45p tax rate which are driving highly wealthy individuals from Britain.”
Investment power
He added that the increasing number of measures conflicts with the government’s stated aim of attracting wealthy foreigners, and undermines new tax rules brought in last year to attract non-dom investment for UK businesses.
The government says that non-doms are increasingly important to Britain’s economy as they have big investment power and can create jobs and new businesses.
Pinsent Masons is now a warning that the UK needs to be careful about how the wealthy are treated since there are growing numbers of other countries competing for these investors to move.
Just 5% of non-doms paid the annual levy – contributing £168 million to the UK’s tax coffers – with the remainder choosing to pay income tax on their worldwide earnings.
