The UK Closing Its Non-Dom Regime Could Turn Out to Be a Big Mistake
The UK has offered a special tax status to non-domiciled residents since the late 1700s. However, the British government recently announced it is dispensing with this colonial-era law, implying significant consequences for many international residents, businesses, and even the UK economy.
So, what exactly was non-domiciled status, and what happens now that it’s coming to an end?
Paying a Fee to Avoid Paying Tax
A person with a non-domiciled status (colloquially referred to as a “non-dom”) is someone who lives in the UK but lists their primary residence as being in another country. Though many non-doms are originally from overseas, there are plenty of instances of British-born residents opting for a foreign main home so as to take advantage of non-dom benefits.
As a non-dom, an individual pays tax on UK earnings, but income or capital gains generated overseas are exempt. Under the non-dom regime, foreign revenues over £2,000 (roughly $2,500) are only subject to tax if they are remitted to the UK.
To benefit from the non-dom scheme, individuals must pay an annual fee of £30,000 (approximately $38,000) if they have resided in the UK for at least seven of the previous nine years. The figure doubles to £60,000 (about $76,000) for those who have lived in the UK for at least 12 of the last 14 years. According to British government figures, there are almost 70,000 non-doms in the UK.