The madness of King George III’s non-dom tax system – This egregious situation lets the wealthiest enjoy privileges without paying their fair dues

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1. Much has changed in the world since William Pitt the Younger was prime minister and the United Kingdom was at war with Napoleon. But among the tax rules laid down by Her Majesty’s Revenue and Customs (HMRC) there remains a fiscal echo of those vanished days.

   The “non-domicile” regime wa introduced in 1799 to shelter those with foreign property from the UK’s wartime taxes. More than two centuries later, it still allows those living in Britain to cite another country as their real domicile.

   Unlike other residents, they are only obliged to pay British tax on their overseas earnings if they remit that money to the UK. In bygone days, when many subjects resided in colonies overseas, this may have had some slender justification. In modern Britain, it has none.

   The rule is exploited by jet-setters and wealthy business executives to pick and choose the least fiscally burdensome domicile while continuing to enjoy the right to reside and work in Britain.

   Their numbers have been rising. Some, such as foreigners temporarily resident in Britain for work, may have a case for doing so. Far more dubious are cases where the individual is a long-term UK resident, or a British citizen who has elected — either through inheritance or from choice — to domicile themselves in a low-tax country.

   This anomaly has been highlighted in recent days by the case of HSBC’s CEO, Stuart Gulliver.

   While a British citizen born in the UK and raised in the UK, Mr Gulliver badged himself as domiciled in the low-tax haven of Hong Kong. Yet not only has Mr Gulliver worked in Britain for the past 12 years, he has retained links with the UK, for instance sending his children to school there. Whether or not arcane rules have been obeyed, this hardly counts as severing all ties.

   The Treasury looked at abolishing non-dom status on several occasions. But each time it drew back for fear of the consequences for Britain’s economy and the City of London in particular. These fears, however, are overdone.

   As for the idea that abolition will trigger a flood of non-doms seeking sanctuary in Switzerland, some footloose individuals may leave. But the many advantages of London as a financial centre do not dissolve simply because of a change in a hitherto generous tax treatment of resident non domiciles. Low-tax cantons cannot match the City’s deep pool of financial expertise or the excitement of London life.

   Britain should sweep away the archaism that allows people to claim a domicile that differs from nationality or residence.

   Few other civilised countries feel the need to offer such privileges to the wealthy. Liability to taxation should be solely based on residence. There can still be a grace period for foreign nationals posted temporarily to the UK before they are obliged to pay British tax.

   More than two centuries after the introduction of income tax by Mr Pitt, his successors should end the egregious situation where the wealthiest enjoy the privileges of UK residency without paying their fair dues to the exchequer. The anomaly of non-dom status cannot be defended.

2. This is only from last June, less than a year ago:

   >The UK government is bringing in a new law that will make it much easier for British elections to be funded by tax exiles and non-domiciled Brits, campaigners have warned.
   >
   >The Elections Bill, published on Monday, would allow UK citizens who have lived abroad for more than 15 years to join the electoral register, giving them a lifetime right to both vote in and fund elections in the UK.
   >
   >Under the new rules, overseas voters would not have had to previously appear on any electoral register in the UK in order to vote or donate to political parties.
   >
   >Since 2009, legislation has sat inactive on the UK’s statute books that would forbid donations from non-domiciled UK citizens. …
   >
   >([Insider: Boris Johnson is creating a ‘trojan horse’ that makes it easier for tax exiles and non-doms to fund UK elections](https://www.businessinsider.com/boris-johnson-loophole-tax-exiles-to-fund-uk-elections-2021-7?r=US&IR=T))

3. All this talk about “non-dom”, I just thought it meant Rishi’s wife was the sub in the relationship

4. I wonder if there is any benefit from having non-doms? We get billionaires living here and they spend some of their money in our economy, but is that significant? Do we get significant soft power from say, having leverage over Russian billionaires? Is it even a security risk having their organisations based here?