Super-rich suffer in cull of the non-doms

THE Tories stole Labour’s clothes yesterday as George Osborne announced an end to permanent ‘nondom’ tax status.

From April 2017 anyone who has lived in this country for 15 out of the past 20 years would be forced to pay tax like a normal British resident.

The attack on some of the richest individuals in the UK – including several Tory Party donors – is expected to generate £1.5billion over the next five years.

It will also be a standing challenge to Labour’s claims that the Tories are the party of the rich.

Non- domiciled status allows some 116,000 foreigners and those with links overseas to pay tax only on money they generate in Britain. Overseas assets, and income from them, are not taxed here.

During the election, Labour said it would abolish non- dom tax status for anyone living in Britain for more than about three years. Ed Miliband said the rule had turned the UK into an ‘offshore tax haven for a few’. At the time, critics said those proposals would cost Britain billions by driving wealthy people out.

Mr Osborne said the non-dom regime was a ‘long-standing feature’ of the tax system and ‘plays an important role in allowing those from abroad to contribute to our economy before returning to their permanent home’.

He pointed to remarks made by then shadow chancellor Ed Balls who once said abolishing the status would ‘probably end up cost- ing Britain money’. But Mr Osborne added that there were ‘fundamental unfairnesses’ in the regime which he would end – including the inheriting of nondom status by children of nondoms born and living in the UK.

The Chancellor said non-doms would be blocked from using offshore companies to avoid paying inheritance tax. ‘From now on they will pay the same tax as everyone else,’ he said.

‘Most fundamentally, it is not fair that people live in this country for very long periods … benefit from our public services, and yet operate under different tax rules from everyone else. Non- dom status was meant to be temporary, but it became permanent for some … Not any longer.’

He added: ‘ British people should pay British taxes in Britain – and now they will.’

The last Labour government considered scrapping non-dom status but instead brought in a £30,000 charge for anyone living here for seven years.

Mr Osborne introduced a charge of £50,000 for those resident for 12 of the past 14 years.

Non-doms are thought to pay around £6billion in income tax a year, plus around £220million a year in the non-dom levy. Those thought to benefit from non-dom status include Russian billionaire Roman Abramovich and steel magnate Lakshmi Mittal.

Shiv Mahalingham, of financial advisers Duff & Phelps, said the changes ‘may deter certain investors from the UK’.

EY’s David Kilshaw predicted a rise in ‘boomerang non- doms’ who would leave the UK for five years to ‘refresh’ their tax status.