George Osborne has begun to talk tax. On domicile Bloomberg report that he is proposing a flat levy of £25,000 pounds ($51,000) on non- domiciled residents who currently avoid tax. They quote him as saying:
You can either register for this levy, or you can take your tax affairs elsewhere
He claims:
The income would help fund tax cuts for families and home buyers and to put a limit on inheritance tax
I've got news for George Osborne. The average tax paid by a non-domiciled person now is £26,800, based on Treasury data. So far from funding Inheritance Tax he's actually planning a tax give-away.
That's the madness of shadow-Chancellor George.
Talk about an own goal.
PS: An update 13.20. I relied on the news / internet reports on this issue. I've now heard the Radio 4 interview this morning. Those who have said I got this wrong are right, in part. But, the numbers still do not stack. In fact, it's worse than I thought. I explain why here.
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Average is not as important as Median. To amke an argument, it is important to quote the relevant figures.
I disagree
Average does nicely in this case. If the average is £26,800 plenty are paying above. They will now pay less. The overall take will, inevitably, fall as a result.
The logic is sound.
The data is all this is available.
Actually, Richard I heard him on Radio 4 this morning and the proposed new £25k is on offshore income only.
A non-dom will continue to pay full tax on UK income, so the tax take to the country of this proposal would increase for each non-dom by the lower of 25k or what is paid by them on offshore income (I assume also capital gains although this was not clarified) no longer exempt from income tax.
but you still got your facts wrong – he said the idea is to charge them a flat £25K – but this is on top of any tax they already pay, as its for the benefit of non dom status
[…] I know, it’s a bit of a shocker but this is simply quite wonderful. You see, Non-Doms don’t not pay tax at all: […]
The BBC report it as additional to the tax currently paid in the UK:
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/10/tories_squeeze_nondoms_1.html
The Tory proposals are very very simple; not hard to understand at all.
Why are you struggling with it, Richard? Is it real miscomprehension or are you deliberately being obtuse?
Andrew
If it is obvious I note Grant Thornton also got it seriously wrong in the Telegraph this morning and most journlaists are mighty confused by it – and I talk to a lot.
Count yourself very clever Andrew
Richard
Is it just me, or is the proposed £25,000 absurdly low?
The very wealthy are prepared to pay £100,000 minimum tax per year to live in Jersey. Now I know the tax systems aren’t identical, but surely from a business viewpoint London with non-dom status is a more valuable residence than Jersey?
I wonder if someone missed out a ‘0’ when they typed up George’s speech, and it should have been £250,000. Now that would be a far more interesting proposal.
Richard
I agree
But it would still be unethical, and I think illegal
Richard
I guess its all estimates until it is implemented and im sure it may have to be tweaked. It is a step in the direction of eliminating discrimination by domicile taxation.
Its a question of the general aims behind the measure and then TRUST. I suspect the domicile rule needs to go. It seems discriminatory in a free movement of labour Europe,to give tax advantages to other European workers.
Surley all residents should be assessed the same, on all worldwide income.
Lets wait for the PBR and possibly a GAAR.
IHT surely could be replaced by Property Tax on Death, at say a flat 1% above £250k sale value. Easy and non avoidable by planning. The tax could be heldover as a charge where the property was jointly lived in.