This is from an FT email this morning:
Flight of the non-doms Experts cite several reasons for the slowdown in London's previously red-hot luxury property market, including changes to stamp duty and concerns about a UK exit from the EU. But for some property agents, one other factor looms large: a potential change to a special tax status for residents known as non-doms.
So, yet again it is argued in advance of a budget that we must keep non-dom tax rules.
Even though they discriminate solely on the basis of a person's national origin, which is usually illegal.
And even though they increase inequality.
And despite the fact that they have massively and harmfully impacted the London property market.
And although there is no real evidence that non-doms actually bring much inward investment to the UK.
But the Pink'un will roll out their support come what may: tackling inequality in the interests of creating a better society for all was never that high on their agenda. But it is on mine. Which is why I have long opposed the continuation of this abuse.
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Please let them leave, they contribute very little to the UK. Smallest violin in the world playing especially for them.
I’m currently working with a non-dom who has been looking for a country in Europe (he doesn’t much mind which) to move to. He’s chosen the UK because the remittance basis allows him to realise gains on his offshore assets and use the proceeds to make investments in the UK without the capital being taxed here (just the future income & gains).
Next time we meet I’ll tell him he doesn’t exist, shall I? 😉
So you want him to have an unfair competitive advantage in this country do you?
Why?
Does that help all budding UK entrepreneurs?
Explain
Oh you mean that sort of “level playing field” – the one where the game is rigged from the outset to benefit the wealthy non-doms that can utilise a different financial/tax regime altogether from UK citizens.
No of course not, we should welcome this fine upstanding person into our country to shaft us royally (or your would say invest and compete) like almost every other person of his breed has done previously.
I think you made yourself look a bit silly there Andrew Jackson!
OK, more details:
A Ruritanian national works hard in Ruritania, makes some money, buy some property and other assets. He has no involvement with the UK during this time. He pays Ruritanian tax on all the income and gains he makes, and so has built up a reasonable amount of wealth in Ruritania.
He then moves to the UK. After he has done so, he sells his Ruritanian property, and realises the value which has built up over the years in Ruritania. As the property is in Ruritania, it is subject to tax there.
The monies are then used to fund start-up businesses in the UK.
Incidentally, I wouldn’t normally bother with remittance basis as the Ruritanian tax would be larger than the UK tax and so double tax relief would do perfectly well; except that in this case there are complications with earlier years which mean that he has already paid full Ruritanian tax on the value, and so any UK tax would be on top of tax already suffered.
The question: what claim does the UK have to tax the value which was built up outside the UK, by a non-UK person, and on which non-UK tax in excess of the UK rates has already been paid?
Richard: where is the competitive advantage? He has suffered more tax than an equivalent UK person would have done. Note that this helps UK entrepreneurs by giving them the capital to start their businesses up.
What exactly is the objection to remittance basis in this scenario?
Andrew
You shoot yourself in the foot: if he is funding new UK VC then he is likely to get tax relief on the gain made from Ruritania
Let’s talk facts: if he is resident in the UK he owes tax on his or her worldwide gains. That’s the rules
Why does an accident of birth exempt some?
Explain the reason for this discrimination, please?
Richard
Likely to get relief, yes. Not necessarily.
Talking facts: the rules are that he is *not* liable to tax on worldwide gains if he is resident in the UK, because the remittance basis says he isn’t.
You might think the remittance basis shouldn’t exist, but it does and it has made a significant difference to this person’s decision about where to invest.
As for why an accident of birth should exempt some people, I would turn that the other way round: why should gains which have accrued over 30 years in Ruritania be taxed in the UK simply because the individual happens to be working here in year 30? Looked at that way, the “discrimination” is simply that there is no real connection between those gains and the UK, and so UK tax should not apply to them.
That is: I am assuming that UK tax should be charged where the connection between the tax base and the UK has some substance to it. You are arguing that UK tax should be charged if there is any connection, no matter how tenuous.
Take an example of what would happen without the remittance basis:
Asset 1 is bought for €100, owned for 30 years, and sold for €1,000 on April 5, just before the individual moves from Ruritania to the UK. Gains subject to UK tax: nil.
Asset 2, identical to asset 1, is owned for 30 years but sold on April 6, just after the individual moves from Ruritania to the UK. Gains subject to UK tax: €900.
What is the reason for *that* discrimination?
Because they (the taxpayer) has chosen to live here
And that means playing by the rules of the place that apply to everyone else
It’s really not hard to work out Andrew
I suspect you are not nearly so blind on other issues
Your Ruritarian client has clearly noticed that he would fit in quite nicely in today’s Tory version of UK democracy. I’m sure he made his fortune in an entirely honest decent way of course!
“Hope’s novels give the impression that Ruritania would not be a pleasant place for a modern person to inhabit, with its feckless, autocratic king, police surveillance of suspected subversives and a social structure deeply polarised between the rich and poor.”
But the thing is, Richard, that I *am* playing by the rules of the UK. The rules are that income and gains accruing to a UK person get taxed here, but those accruing to non-UK people don’t: and simply living here for a year or two doesn’t make you British enough to be taxed on everything.
It is *you* who is complaining that the rules are inappropriate. But you have not explained why they should be changed: you have simply said that tax should be charged in the UK, regardless.
You also seem to have lost the point of this discussion, which is that you said there is no evidence that the remittance basis attracts investment to the UK. Here I am with a case where it *has* attracted investment to the UK, and you reply by saying that the remittance basis should not apply.
The logical conclusion is that you would rather that the investor had stayed away – so the UK loses out on the investment – than come and invest here if it means that non-UK gains suffer no UK tax. Which rather seems to be throwing the baby out with the bathwater.
Yes Andrew the rules are inappropriate
They bias the wealthy
They would be il;legal if offered by a private sector body on the grounds of discrimination
They are anti-far competition
They prejudice British people
But they make you a fee so you can live with all that
I do really wonder why I let you on here
You make a lot of assertions there. Can you back them up with any evidence?
The effect of the rules that money which never comes near the UK is not taxed here. Your position is that money which never enters the UK economy should nevertheless be taxed here. What is the basis for that position?
If anything, it is UK people who are at a disadvantage here, not non-doms having an advantage: it would be most fair if the remittance basis were to apply to everyone.
In reply to your points:
The rules say nothing about wealth: you can access the remittance basis if you have £1 of interest from a foreign bank account.
Private bodies can’t tax people, so I’m not quite clear what you’re on about. But a private landlord couldn’t charge rent for a flat in a block it didn’t own, which is a reasonably close analogy to the UK charging tax on foreign income.
The remittance basis promotes fair competition: for example, because it means that my client can come to the UK and invest here on a level playing field: he doesn’t have to factor in a double tax charge that a UK person wouldn’t have to suffer.
The British people are in no way prejudiced. Without the rules: my client doesn’t come to the UK, the UK collects no tax on his foreign income, and the UK gets no investment from him. With the rules, he comes here, the UK gets tax on his UK income, and gets investment. The rules leave the British people benefiting by the tax he pays and the investment he makes.
It’s called residence Andrew
And we have a world wide taxation rule on residence
As we should for companies too
And the reason why we have it is it would be massively easy for the wealthy to avoid all tax if we did not
And no doubt you and your ilk would really like that
Candidly – you’re hitting the delete button now. I am bored by the implicit callousness, discrimination and promotion of the opportunity for abuse inherent in your comments
I think they shame our mutual profession and I have had enough of them
Back to the original non-dom question. How many are there, how many might be leaving, how many properties are on the market that they buy in and so on? I read recently though I cannot recall where, that the massive surge in numbers of properties built for the overseas investor market (eg Nine Elms) is way in excess of sales volumes in recent years. This sounds a lot more credible as a cause of price fragility than the odd non-dom.
Contrasts with the acute failure to build anything like the required amount of genuinely affordable housing…