Recently, the non-domicile tax status abolishments have become the headlines. There has been speculation that the UK government could end the non-dom tax status in the UK in the upcoming Budget session. Here’s what you need to know about the Non-dom tax status of the UK.
Non-Dom Tax Status UK
Non-dom tax status is a short form for Non-Domicile people and is a term used for UK residents living in the United Kingdom but claiming that their permanent home or domicile is in a foreign country.
State Pension Age Waspi Female Payout Â
The Non-Doms get some tax breaks on the investments they make outside the UK, meaning they will pay UK tax on money earned in the country, but their money coming from the investment outside the UK is tax-free.
The non-dom status has provided many wealthy individuals an opportunity to legally save their money by getting the domicile of another country.
Many people have been living for several years in the UK with a non-dom tax status. According to the legal definition of non-doms, all types of people come in the non-dom tax status, such as foreign workers who have family back home, foreign students studying in the UK, etc.
According to reports from Human Revenue and Customs, in 2022, 68,800 people claimed non-dom status.
The government or authorities are thinking of ending this status to get rid of the tax breaks it offers to the non-doms.
Who qualifies for the Non-Dom Tax Status in the UK?
People who qualify for the non-dom status should prove the following criteria:
- You or your father is born in a foreign land other than the United Kingdom.
- You planned to move to that country.
- You should be a UK resident and a taxpayer but have a permanent home outside the UK on a foreign land.
Some exceptions are there as well such as an individual may qualify for the non-dom status if they have solid personal links to the other country.
Non-doms charges in UK
The Non-doms have certain following rules:
- The Non-doms who have been in the UK for the last seven years of the previous nine tax years have to pay £30,000.
- The non-doms who have been here in the UK for the last 14 tax years must pay £60,000.
- If you have been a UK resident for 15 out of 20 tax years, you cannot claim the non-dom status in the UK. However, if your annual income from a foreign land is less than 2000 and you do not bring that earning to the UK, you do not have to pay anything or show that income.
Reasons for the abolishment of the Non-dom tax statusÂ
For the end of non-dom tax status there have been arguments and claims, we have listed all the reasons for you to understand whether it is the right or wrong decision to end non-dom tax status in the UK.
- The tax break encourages people to invest outside the country and make tax-free money out of it, this leads to less investment in the UK.Â
- The Non-dom status is given to people who have an intention to leave the country in the future or who make such claims. Due to this, many people do not settle here, and the UK lost many talents that could help in building the economy.
- The tax break to the non-doms seems unfair to people who are born in the UK and pay the tax on their incomes made from foreign investment. Plus, many non-doms who use this status are already wealthy and this tax break allows them to save money legally from their foreign earnings.
- The abolition of the non-dom tax status could raise revenue which could help in recession or stabilize the UK economy.
How much will the UK save from the end of Non-Dom status?
According to the study conducted by the London School of Economics and Warwick University, the end of non-dom tax status can raise a yearly amount to £3.6 billion.Â
The report also accounts for the behavioral changes in the non-doms after the abolition to save their taxes.
According to reports, every year there has been an increase in the number of non-doms but after the 2017 changes in rule, there were some decreases in the number of non-doms as people who have been living in the UK for more than 15 years are not eligible for the non-dom tax status.Â
The final confirmation or the decision of non-dom tax status will be known to us on 6 March 2024. Till then, we can only speculate and wonder.Â
 Go to investbihar Homepage To Get Relevant Content.