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Non-Dom Number Drop This Year Attributed To Changes
The fall in non-doms declaring their status in the UK is being attributed to the introduction of an annual levy and the changes in inheritance tax, according to Weybridge-based chartered accountancy firm Midgley Snelling.
In the last year there has been a significant decrease in the number of people declaring themselves as non-doms, or non-domiciled.
The £30,000 annual levy, which was lifted to £50,000 at this year’s Budget for those living in Britain for more than 12 years, was introduced in April 2008 and is a way of taxing non-doms who do not pay regular income tax. Since its inception, the number of registered non-doms has fallen by almost 16,000.
With this is mind, the Government seemingly went easy on nom-doms in this year’s Budget, perhaps with the hope that there will now be an increase in the number of people declaring themselves as nom-doms and promoting Britain as a place to do business.
Changes to how non-doms are taxed proved to be far gentler than many had anticipated. Even though the annual levy was lifted, in return non-doms will pay no tax on funds remitted to the UK that are then invested in British business.
Non-doms could also breathe a sigh of relief as the Chancellor said that there would be “no other substantive changes” to the nom-dom rules for the remainder of the current parliament.
The gentle approach to non-doms in this year’s Budget is expected to boost the appeal of London as a place of residence.
Robin Sewell, the Managing Partner at Midgley Snelling, said: “Non-doms can breathe a sigh of relief that they escaped a full-blown Government crackdown at this year’s Budget. Even though the levy has been raised for long-term residents, they will receive a tax break on any funds that are put into British business.
“Sadly George Osborne did not deliver any significant changes to the inheritance tax laws, which may have encouraged more people to declare their status in the UK and therefore support the idea that ‘Britain is open for business’. The only change made was for those who left 10% of their inheritance to charity would be charged on the estate at a rate of 36%, a 10% reduction from the usual 40%.
“Previous changes to the inheritance tax laws have lead to many non-doms changing their status to become domiciled, or simply leaving the UK altogether. Until recently, married couple and civil partners were incorporated in the established inheritance tax charges. However, UK law now exempts husbands and wives and civil partners from inheritance tax, but this does not extend to include non-doms.”
The remaining partner only receives a tax-free sum if it is under £325,000. Amounts beyond this are taxed at 40%.
The reasons behind this rule are to dissuade UK domiciled residents from transferring assets to non-dom spouses or partners, and therefore avoiding the inheritance tax altogether.
Non-doms are defined by three general rules; domicile of choice, domicile of origin and domicile of dependency.
Domicile of choice is determined by where you have chosen to make a new country your permanent home, with no intention to ever returning to the UK.
Domicile of origin is the country that your father is domiciled in, not your country of birth. If your parents were unmarried at the time, then the domicile of origin is your mother’s instead.
Domicile of dependency relates to children under the age of 16. This comes into effect if the father changes his domicile, or the mother does in the cases of unmarried parents.
For more information please call Midgley Snelling on 01932 853393 or visit www.midsnell.co.uk.
Ibex House, Baker Street
Weybridge, Surrey KT13 8AH
Tel: +44 (0)1932 853393
Fax: +44 (0)1932 854323
email@midsnell.co.uk