Please see my answer here http://www.taxresearch.org.uk/Blog/2007/10/10/the-garbage-some-accountants-utter/#comment-213496

Richard

A hard and fast rule by the UK tax authorities could apply 25-30,000 GBP to the worldwide income from the UK and the USA. This might result in all of the income in the UK and the USA resulting in 100% tax if they live in the UK. I am mindful that the assets could be more, but the subject is a flat tax regardless of source or amount. If the poor UK resident, wishes to forgo the flat assessment, then he shall pay tax on world wide income…while the US will still ask for full payment on the US income, plus any UK income (e.g two worldwide tax authorities, without a really fair dual taxation treaty).

So what will be the answer? It will be to leave the UK, seek a tax haven for retirees, and definitely not come back to the UK, unless for a limited time each year…picking a country that will permit the US pension to be paid gross without double taxation. The assets that might remain in the UK like a house will have an interesting result, because they could be rented and tax paid as a non resident, non domiciled, non person in the UK….making sure that you never came back for more than 90 days, otherwise you would become a non dom, and whacked with a confiscatory levy.

Remember the money that you paid for health cover, or your wife paid for national health….be sure that your sickness is less than 90 days per year, otherwise your hospital stay will be more than it costs in the USA.

This whole subject and the approach smacks of the poll tax in Scotland before what resulted in non application in England. It is experimentation with political whim, and dam the fairness or consequence.

Like the burmese monks, probably the retirees will not riot , but walk with their empty bowls down the street. Walking might be the only way, as they would not have enough for a car, a train, just a bicycle. In the past few years, there has been an eight fold increase we are told in the bankruptcy of pensioners….and it could increase with these new policies. The only problem will be where to file, UK or USA?

In short, they have 25,000 non-doms with no UK taxable income. It is from that population that they assume 15,000 will pay the £25,000. This gives £375m.

They then have a remaining 100,000 non-doms, who they assume have an average of £10,000 pa unremitted income. Taxing that at 30% gives a further £300m.

Current tax lost is £25m - hence the reported total of £650m.

Leakage, e.g. going abroad, etc., loses £150m from that.

It will be interesting, if the government decide to do anything, whether these treasury numbers change.

Richard

This may surprise you, but I agree that it is unfair to tax some people at 40% and others - with the same income - at 10% or less.

I just don’t think it is a practical answer to try to tax everyone at 40%.

The non-doms’ wealth is concentrated in a few hands, and most of them could easily become non-resident. Look at the Sunday Times Rich List - the ones that are UK-domiciled (such as Sir Philip Green) are thought to be non-resident.

This is why I argue for a low, flat tax.

Richard

I wasn’t talking about abuse of the system (I don’t work with people like that), just legitimately claiming non-dom status to keep modest amounts of savings offshore.

Richard

I’m sure you’d also join me in welcoming the reduction in offshore business that the abolition of this rule would create.

Richard