Labour pledges to scrap non-dom tax status

8th April 2015


Labour has pledged to scrap non-domicile status, which allows wealthy individuals to avoid paying UK tax on some of their foreign earnings.

Ed Miliband says the status “makes Britain an offshore tax haven”, but the party is uncertain how much cash the measure would raise, even though an estimated 115,000 people would be affected.

Non-doms are British residents who pay tax on UK earnings, but have a permanent home abroad and do not have to pay tax on foreign income as long as it stays out of the UK.

Qualifying individuals are normally born abroad or have a parent or grandparent who was born overseas. They must demonstrate that they own property abroad or plan to be buried there.

The Chancellor, George Osborned, labelled the move as “tinkering around the edges”. The Conservatives said they had raised more money from non-doms than any other government.

A video has also emerged of shadow Chancellor Ed Balls in January this year stating that it would be wrong to abolish the non-dom rule, because it would cost Britain money in lost tax revenues.

Speaking to BBC Radio Leeds on 9 January, he said: “I think that it is important that you make sure the non-dom rules work in a fair way. I think they were too lax in the past. Both the last Labour government and this Conservative government have tightened them up. That is something I will continue to look at.

“I think if you abolish the whole status then probably it ends up costing Britain money because there will be some people who will then leave the country.”

In a speech in Warwick today, Ed Miliband is expected to say that the non-dom rule is born of  the view that “anything goes for those at the top and that what is good for the rich is always good for Britain”.

The last Labour government introduced a £30,000 charge for people resident in the UK for seven of the previous 10 years but who were non-domiciled for tax purposes.

Under Labour’s proposals, no new residents will be able to claim non-dom status after April 2016 and existing non-doms will have a “short period” to adjust their tax affairs.

Miliband will say: “There are people who live here in Britain like you and me, work here in Britain like you and me, are permanently settled here in Britain like you and me, but aren’t required to pay taxes like you and me because they take advantage of what has become an increasingly arcane 200-year-old loophole.

“There are now 116,000 non-doms, costing hundreds of millions of pounds to our country. It can no longer be justified, and it makes Britain an offshore tax haven for a few.”

The Chancellor, George Osborne said: “Either they are going to abolish non-dom status altogether which would cost our country hundreds of millions of pounds in lost tax revenues and lost investment – the reason they did nothing on this during thirteen years in office.”

“Or they are just tinkering around the edges and making small adjustments to the rules on how long people can be non-dom. This confusion is another reminder of why they can’t be trusted with our economy.”

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