The Guardian reported yesterday that:
The number of super-rich people who live in the UK but pay no tax on their offshore income has fallen to a record low, according to figures published by HM Revenue & Customs (HMRC) on Thursday.
UK-based people with non-domicile tax status – so called ‘“non-doms” – in the 2017-18 financial year totalled 78,300, a fall of 13% on the previous year.
Their status led to a £2bn decline in the taxes they paid to the exchequer. The amount of tax they paid fell from £9.5bn in 2016-17 to £7.5bn last year.
Tax experts said the drop in non-doms reflects the growing number of wealthy people leaving the UK because of Brexit uncertainty and fears that a Jeremy Corbyn-led government would introduce a “wealth tax” to tackle growing inequality.
Josie Hills, a senior tax manager at the law firm Pinsent Masons, said: “Brexit uncertainty is driving out many of the wealthiest non-doms who are not prepared to hang around to find out the outcome.
Let me offer an alternative explanation that I think much more likely than this deeply politically driven hype from the firms servicing this declining market.
It costs to be a non-dom. The charge can be as much as £60,000 a year. It increases the longer a person claims to be non-domiciled.
My suggestion is a simple one. The non-doms might not be leaving. Instead I suspect they may just be choosing to pay their taxes in the UK.
Accounting on a remittance basis is a hassle.
The cost is growing for many non-doms as time elapses.
And it is known that HMRC is more willing to challenge non-dom status now.
The result? It’s just easier to pay your tax and live hassle-free, I suggest.
That, I think is the reason for the decline in the number of non-doms.
And that helps explain the growing concentration in tax paid by the very wealthy.
I am not saying the non-dom problem has gone away. But I am saying that knee jerk reactions to news about it may not be appropriate. And HMRC may be making progress here.