I am as amazed as almost every other commentators at Gordon Brown's loss of a deft touch as prime minister. Take this as the next example. The FT has reported that:
An elite of wealthy foreigners living in Britain faces paying billions of pounds in capital gains tax on UK-based assets, under far-reaching legislation being drawn up by the Treasury.
Why? Because the Treasury is now seeking to crack down on offshore trusts that allow "non-domiciled" residents to escape tax on their UK investments. The result will be that even those non-doms paying £30,000 a year to keep in the remittance based tax system will see a significant rise in their tax bills, because they will not be able to use trusts to claim that much of their UK income and gains fall outside their own tax charge.
As the FT reports there's panic in the corridors of the wealth management industry:
The move has sent shockwaves through the wealth management industry, which says the measures could undermine the London art market, drive much of the private equity industry abroad and trigger the sale of property and UK shares worth billions of pounds.
All of this is, of course, untrue. There's no evidence that anything like this will happen. But that's not the point.
Wouldn't it have been so much more honest to have just said "be done with it - the domicile rule is abolished"? That way Brown and Darling would have had the upper hand on the Tories and mass support fro their move. This way they're winning with nobody.
Fudging never pays when you're dealing with fiddlers. I thought Brown should have learned that by now. He obviously has not.
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Even if it did have an effect on the housing market, so what? Does anyone think London house prices are in danger of going too low?
It always amazes me that people seem to think that:
1) A poor foreign worker living a single room (in a tatty building in a cheap area) that most British people would refuse to live in is somehow over-crowding the country, but,
2) A rich foreigner who buys a mansion in central London is not.
Many of the points you make about the domicile rules are valid. But simply abolishing the concept would lead to more anomolies: for example, as from next April anyone attending an average of 4 meetings a month in the UK involving an overnight stay will become UK tax resident under the 90 day rule, and without the domicile rule would become liable to UK tax on their world wide income. I’d be interested in you views on whether this would be “fair” and if not how you would propose to deal with this anomoly.
Peter
4 meetinsga month in the UK? You’re working here
So you should pay tax here, with full credit for that paid elsewhere
This is universally considered fair. What is the problem with that?
Richard
OK then what about someone living in the Isle of Man who has 4 meetings a month in Paris? The only way to travel from the Isle of Man to France is via the UK. He neither lives nor works in the UK, nor does he have any UK source of income. Is it really fair that he should be treated as UK tax resident, both in terms of his worldwide income and his estate being liable to UK inheritance tax?
Peter
Transit is exceptionally unlikely to trigger this – you do not officially enter the country.
But let me be candid, I have little concern about exposing the tax abusers of the Isle of Man to UK tax, afterall, the UK provides most of its funds.
Richard