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Non dom status used by nearly 70,000 people to cut tax bills in UK, official figures show

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Nearly 70,000 people used non-domicile status to trim their tax bills according to fresh figures from HMRC.

In the tax year to 2021, 68,300 people used the benefit, compared to a pre-COVID figure of 76,500. The pandemic was cited as the likely reason for the decline.

The data come amid heightened interest in the tax break following revelations about how it has been used by leading politicians and their families.

Conservative leadership hopeful Rishi Sunak’s wife, Akshata Murty, used the status while resident in Downing Street while her husband was chancellor, The Independent revealed in April. Ms Murty subsequently committed to stop using the status.

Another former chancellor, Sajid Javid, used an offshore trust to perpetuate the benefits of non-dom status while an MP and working in the Treasury as a ministerial aide, The Independent reported earlier this month.

Arun Advani, associate professor at the University of Warwick said in response to the figures: “This is a reminder that while the non-dom regime is alien to most people, use of this tax break is common among the wealthiest.

“The latest figures show use of this tax perk has continued to remain high, continuing to cost the Treasury money during a cost of living crisis.”

Using so-called non-dom status allows individuals not to pay tax on their worldwide income, unlike other ordinary taxpayers who must pay income tax on any income whether earned at home or overseas.

It can be claimed on a remittance basis on an individual’s tax return and it is costly to retain over time. A person must pay £30,000 a year if they have lived in the UK at least seven of the previous nine tax years rising to £60,000 if in the country for at least 12 of the previous 14 tax years.

Non-doms are able to reside in the UK 365 days a year, though there are supposed to be limits on how long they can use the status to cut their tax bills. The status should only be used on a tax return if an individual has been living in the UK for fewer than 15 of the past 20 years.

However, creating offshore trusts, often based in tax havens, can allow individuals to perpetuate some of the tax benefits that come with using non-dom status.

There is no clear evidence of how much the tax benefit may cost or benefit the total tax gathered by the country.

A new analysis from the London School of Economics and University of Warwick, shows that one in seven billionaires on the 2020 Sunday Times Rich List (STRL) are unlikely to be resident in the UK for tax purposes.

However, of those on the STRL who do live full-time in the UK, close to one-third, 28 per cent (251 indviduals), are likely to be non-dom. That compares to 0.1 per cent of the wider UK population.

Andy Summers, associate professor at LSE Inequalities Institute said: “Around half of billionaires have significant ties abroad. But those lower down the list appear to be more rooted in the UK, with only one in five living or coming from overseas.”

One in seven billionaires, 14 per cent, reside in zero or low-tax jurisdictions, according to the study. Popular locations include Monaco (27 individuals), The Bahamas (5), and the United Arab Emirates (5).

Hannah Tarrant, research officer at LSE Inequalities Institute said: “Though many own substantial wealth in the UK, it is striking to see that one in seven of the billionaires lives in a tax haven.”

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