“Non-dom” is short for “non-domiciled individual”. It refers to the tax status of someone who is a UK resident and whose permanent home (or domicile) is outside the UK.
Government figures show that in the tax year 2021/22 there were at least 78,700 non-domiciled and deemed domiciled taxpayers. This is an increase of 10% compared with the previous year however the number is below pre-pandemic levels.
The non-dom individuals’ contributions reflect combined tax and National Insurance payments. The record amount of £12.4bn during 2021/22 was a sharp increase from the previous year (£7.8bn). It was the highest amount paid since non-dom payments were first recorded (2008). This is despite the number of non-doms being just over half the level of non-dom people in 2008. The taxes contributing to the amount paid were:
- income tax,
- capital gains tax,
- National Insurance contributions, and
- Inheritance tax (UK assets).
HMRC has stated there was some evidence of a recovery in tax collection for the year ending 2022 in newly arrived non-domiciled taxpayers. This follows the drop in the previous tax year when taxpayers were subject to Covid-related travel restrictions.
Non-dom status has received political interest this year. The Labour party has stated its intention to ‘abolish non-dom status’ if elected. This focus may encourage the current Conservative government to scrutinise and tighten this legislation.
Currently, non-UK domiciled individuals are taxed on a remittance basis and only pay inheritance tax only on UK-situated assets. ‘Scrapping the status may encourage the non-dom population to relocate to a country with a more favourable tax regime,’ says Emily Bridges of re:accounts Chartered Accountants in Stevenage. ‘This would result in a significant loss in tax revenue. Retaining the non-dom status would help the UK to remain an attractive destination for inward investment.’
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