HMRC has recently published its annual statistical commentary on non-domiciled taxpayers in the UK. The report’s key findings are set out below.
The Key Findings
HMRC estimate that there were 75,700 individuals claiming non-domiciled taxpayer status in the UK in the 2019/20 tax year, down slightly from 78,600 in 2018/19. The report finds that the number of non-domiciled taxpayers flattened out at a reduced level over the three years following deemed-domicile reforms in April 2017, due to these taxpayers becoming either domiciled or no longer paying tax in the UK. HMRC believes the impact of the reforms has now stabilised, with the number of non-domiciled taxpayers who are UK-resident having remained largely unchanged from the previous year.
HMRC estimates that non-domiciled taxpayers are liable to pay £7,853 million in UK Income Tax, Capital Gains Tax and National Insurance contributions in the 2019/20 tax year.
Deemed domicile reforms introduced in April 2017 meant that an individual who was formerly non-domiciled might be deemed domiciled for tax purposes if they were born in the UK and have a UK domicile of origin, or if they were resident in the UK for at least 15 of the 20 tax years immediately before the relevant tax year.
Despite the decrease in the number of non-domiciles, 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-domiciles offsetting those that no longer pay tax in the UK.
Further details of the report can be found here.
The ‘Non-Dom’ Tax Regime
Even though many non-doms pay substantial amounts of tax in the UK (as evidenced by the figure above), it is possible to live in the UK for as long as 15 years and pay little or no tax. If you are UK-resident but not domiciled (i.e. a non-dom) you will probably be able to be taxed on the ‘remittance basis’. If you are eligible for the remittance basis, you are only taxed on your non-UK income and capital gains to the extent that they are brought into (or enjoyed in) the UK.
Therefore, if you do not have any UK income and gains and you do not need to bring any of your non-UK income and gains into the UK to live off, then you can be tax-resident in the UK but potentially pay no tax at all here.
This is a huge benefit and one of the many reasons that make the UK an attractive place for people to move to.
The rules are complicated and it is important to take proper advice to ensure that you do not inadvertently make a taxable remittance.
How can we help?
Gherson can help with a wide range of tax and estate planning matters. We also have extensive experience of working with HMRC and dealing with HMRC investigations. The UK tax system is complicated and it is essential that proper advice is obtained. Please do not hesitate to contact us or send us an e-mail.
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.