Non-dom taxpayer numbers stable

The number of individuals claiming non-domiciled taxpayer status in the UK has stabilised at an estimated 78,000 according to the latest HMRC figures, suggesting fears that a tougher tax regime would see many leaving the country are unfounded

Based on data from self-assessment tax returns, in 2018-19 the number of non-doms was 700 lower than the previous year’s 78,700. They paid £7.83bn in UK income tax, capital gains tax (CGT) and National Insurance contributions (NICs), a slight increase from the previous year’s estimate of £7.57bn.

In comparison, there were 137,000 non-doms in 2009-09, dropping to 119,400 in 2015-16 and then 91,300 in 2016-17.

HMRC analysis shows that despite the decrease in the number of non-doms this did not result in an overall fall in revenue to the exchequer, with those becoming domiciled continuing to pay tax in the UK, and the tax received from new non-doms offsetting those that no longer pay tax in the UK.

Further analysis indicates the number changing status in 2018-19 from non-dom to domiciled has slowed down, and the number of new non-doms almost offsets both these and those that have stopped paying tax in the UK.

This suggests the impact of the deemed domicile reforms has started to stabilise, and in turn the number of non-doms has remained largely unchanged from the previous year.

Mike Hodges, head of the private wealth group at Saffery Champness, said: ‘The so-called flight of the non-doms seems, so far, to remain a prediction rather than a reality.

‘The effects of the 2017 reforms to the non-dom rules have clearly had an effect, but based on these figures it looks like those who were planning to leave as a result have likely already done so and it’s therefore unsurprising that the relative flood of departures in previous years slowed to a trickle in 2018-19.’

Hodges pointed out that some non-doms who might have been considering a change in status may have delayed any decision because of the many uncertainties in the current economic and political climate, including the election at the end of last year, four months of lockdown and a continuing lack of clarity over the impact of Brexit.

‘Certainty is a difficult commodity to come by in the current climate however, and non-doms will be keeping a watchful eye on how the government’s response to the Covid-19 crisis evolves. Clearly the Chancellor is on the lookout for sources of revenue to bolster the coffers drained by the government’s relief efforts and his eye may turn to non-doms, particularly given the persistent rumblings about a wealth tax.

‘Non-doms will likely be considered a safe target politically, but the Chancellor will need to be mindful to not throw the baby out with the bathwater with non-doms providing a significant source of investment in the UK economy – something which he will hope continues post-Brexit,’ Hodges said.

HMRC data shows that non-doms claims for business investment relief almost halved between 2016-17 (£1bn) and 2018-19 (£512m).

Statistics on non-domiciled taxpayers in the UK

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