by Giacomo Francioni.

On the 8 August HMRC released an updated report on the number of non-domiciled taxpayers in the UK, that fell by 13.5% to 78,300 in the 2017-2018 tax year.

This important fall in numbers coincided with the introduction of wide-ranging reforms to the taxation of resident non-domiciled individuals. Rules introduced in April 2017 ensured that long staying non-doms (i.e. UK resident for more than 15 of the last 20 years) would become UK deemed domiciled and taxed on their worldwide income and gains.

According to HMRC, about half of the decline in non-dom numbers resulted from individuals leaving the UK. The other half consisted of non-domiciled individuals switching to domiciled status most of the time because of the above mentioned newly introduced 15/20 deemed domicile rule.

In line with these figures, accountancy firm Moore Stephens suggested that a quarter of non-doms were planning to leave the UK within a year. The popular underlying reason is that the rules on the taxation of non-doms are a lot stricter, including the GBP 60,000 annual remittance basis charge; the deemed-domicile rules for long-term non-doms; and the ‘failure to correct’ legislation which introduced heavy new penalties for offshore non-compliance.

The amount of tax collected from non-doms dropped by almost GBP2 billion from GBP9.5 billion in 2016-2017 to GBP7.54 billion in 2017-2018. Despite this, HMRC claims that total revenues have not reduced. Instead, they say that contributions in these statistics comes from taxpayers who were previously non-domiciled, becoming domiciled.

London has the largest non-domiciled taxpayer population, with 58 per cent of UK non-doms living there. London also has the largest number of non-doms taxed on the remittance basis.

Non-dom contribution towards UK business investment is at the highest figure since the business investment relief scheme was introduced. Since its introduction, individuals have claimed nearly GBP3.5 billion of business investment relief with a peak of GBP 979M in 2016/17.

 

 

Giacomo Francioni

After graduating from Bocconi University in Milan with a bachelor’s degrees in Business Administration and completing a master’s degree LL.M in International Tax at Queen Mary University in London, he qualified as a Trust Estate Practitioner TEP in the United Kingdom. He mainly provides consultancy to individuals and family businesses, on UK and international taxation, estate planning, trusts and residential real estate. He is a junior partner of Belluzzo & Partners LLP in London, where he lives since 2007 with his wife and daughter.

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