According to the Sunday Times, George Osborne, the Chancellor, is considering somehow extending the current tax regime for foreign resident non-domiciled individuals. Currently, they must pay £30,000 a year to avoid being taxed on their worldwide income.
However, this only applies after seven years of residence and possible change could be to make non-doms pay the levy after they have been resident for less than seven years, or regardless of the duration of residence – or instead be taxed in the UK on global income and gains.
The Sunday newspaper further reported that Vince Cable, the Business Secretary, wants to see all non-doms taxed on a worldwide basis once they have been resident for seven years, removing the option to pay the £30,000 levy for what is known as remittance basis taxation.
The £30,000 charge was introduced by the then Labour government in 2008 amid criticism that wealthy foreigners were able to treat the UK as a tax haven by only having to pay tax on UK income and gains, while UK domiciled citizens pay it on a worldwide basis.
There are estimated to be some 120,000 non-doms living in the UK, though this number is falling, with around 16,000 leaving the country the year the new charging regime was introduced.
The levy has not yielded as much tax as had been estimated – approximately £160m a year, a quarter of what had been expected. Any new regime will attempt to be make up or all of this shortfall.
