Non-Domicile Regime to be scrapped under Miliband

| 8th April 2015

As the election campaign heats up, Ed Miliband has announced that if he is elected to Number 10, the current non-domicile rules, which allow some UK residents to limit their tax liability, would be abolished.

Normally, UK residents pay UK tax on all their earnings, regardless of where they originated from. The current rules for ‘non-domiciled’ UK residents allow them to only be taxed on the overseas income they bring into (or ‘remit’) the country.

Non-domiciles electing to use this basis of tax need to pay a charge to HMRC for the privilege (effectively paying a rent to use the UK as their residence). The charge is based on the length of time they have been resident in the UK –

  • Resident for 7 out of the previous 9 years (but less than 12 years total) = £30,000 per year.
  • Resident for 12 out of the last 14 years (but less than 17 years total) = £60,000 per year.
  • Resident for 17 out of the last 20 years = £90,000 per year.

The charge was originally introduced by Gordon Brown under the previous Labour government, and in the 2014 Autumn Statement George Osbourne increased the 12 year charge to £60,000 and introduced the higher £90,000 charge as well.

The announcement seemed to contradict an interview with Shadow Chancellor Ed Balls in January who said that such a move would ‘end up costing Britain’. He later stirred up further controversy by suggesting that the Tories edited the footage.

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