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| Permanent non-dom tax status to be abolished, chancellor announces | |
| (35 minutes later) | |
| George Osborne has pledged to end permanent entitlement to the controversial non-domicile loophole that has let thousands of wealthy families live in Britain without paying tax on their overseas income. | George Osborne has pledged to end permanent entitlement to the controversial non-domicile loophole that has let thousands of wealthy families live in Britain without paying tax on their overseas income. |
| Non-dom status is to be abolished for individuals who were born in Britain to UK domiciled parents, and for those born abroad who have lived in Britain for more than 15 of the last 20 years. | Non-dom status is to be abolished for individuals who were born in Britain to UK domiciled parents, and for those born abroad who have lived in Britain for more than 15 of the last 20 years. |
| Announcing the measure in the summer budget, the chancellor said: “British people should pay British taxes in Britain - and now they will.” The new rules take effect in April 2017 and should raise £1.5bn over the course of this parliament, Osborne claimed. | Announcing the measure in the summer budget, the chancellor said: “British people should pay British taxes in Britain - and now they will.” The new rules take effect in April 2017 and should raise £1.5bn over the course of this parliament, Osborne claimed. |
| He said: “It is not fair that people live in this country for very long periods of their lives, benefit from our public services, and yet operate under different tax rules from everyone else.” | He said: “It is not fair that people live in this country for very long periods of their lives, benefit from our public services, and yet operate under different tax rules from everyone else.” |
| Curbs on non-doms were first proposed by Ed Miliband during the general election. Osborne stopped short of Labour’s proposals to completely abolish non-dom status, saying this would cost the country money in lost tax receipts, but he condemned its “fundamental unfairnesses”. | Curbs on non-doms were first proposed by Ed Miliband during the general election. Osborne stopped short of Labour’s proposals to completely abolish non-dom status, saying this would cost the country money in lost tax receipts, but he condemned its “fundamental unfairnesses”. |
| The chancellor also appeared to shy away from penalising hereditary non-doms - in some families up to three generations can be born and brought up in the UK without relinquishing the tax perk. The Treasury’s policy states: “It will no longer be possible for somebody who is born in the UK to parents who are UK domiciled to claim non-domicile status if they leave but then return and take up residency in the UK” | The chancellor also appeared to shy away from penalising hereditary non-doms - in some families up to three generations can be born and brought up in the UK without relinquishing the tax perk. The Treasury’s policy states: “It will no longer be possible for somebody who is born in the UK to parents who are UK domiciled to claim non-domicile status if they leave but then return and take up residency in the UK” |
| Related: Non-dom status: living and working in the UK, without paying all your tax in the UK | Related: Non-dom status: living and working in the UK, without paying all your tax in the UK |
| This change appears to penalise individuals like HSBC chief executive Stuart Gulliver, who was born in Britain to British parents, and educated at a grammar school in Plymouth and Oxford University. He achieved non-dom status by working abroad for several decades and by claiming he intends to live in Hong Kong when he retires. | This change appears to penalise individuals like HSBC chief executive Stuart Gulliver, who was born in Britain to British parents, and educated at a grammar school in Plymouth and Oxford University. He achieved non-dom status by working abroad for several decades and by claiming he intends to live in Hong Kong when he retires. |
| But families like those of the Conservative MP Zach Goldsmith, who inherited the status from his father before relinquishing it when members of Parliament were banned from using the tax loophole, will escape the new rules. Zach’s brother Ben is thought to have retained his non-dom status. | But families like those of the Conservative MP Zach Goldsmith, who inherited the status from his father before relinquishing it when members of Parliament were banned from using the tax loophole, will escape the new rules. Zach’s brother Ben is thought to have retained his non-dom status. |
| Some 114,000 UK residents currently benefit from the tax break, which allows them to only pay tax on UK earnings. But the rule has been subject to widespread abuse, with wealthy residents owning UK assets such as homes and art collections through offshore companies in order to avoid UK tax on increases in their value. Others have banked fortunes in countries like Switzerland, helping them avoid tax in both their countries of origin and in Britain. | Some 114,000 UK residents currently benefit from the tax break, which allows them to only pay tax on UK earnings. But the rule has been subject to widespread abuse, with wealthy residents owning UK assets such as homes and art collections through offshore companies in order to avoid UK tax on increases in their value. Others have banked fortunes in countries like Switzerland, helping them avoid tax in both their countries of origin and in Britain. |
| The unfairness of the non-dom regime came under the spotlight after the Guardian’s investigation into HSBC’s Swiss subsidiary revealed that Stuart Gulliver, the chief executive of the London-headquartered bank who was born and educated in Britain, was claiming non-dom status on the grounds that he planned to retire to Hong Kong. | The unfairness of the non-dom regime came under the spotlight after the Guardian’s investigation into HSBC’s Swiss subsidiary revealed that Stuart Gulliver, the chief executive of the London-headquartered bank who was born and educated in Britain, was claiming non-dom status on the grounds that he planned to retire to Hong Kong. |
| It is unclear how many individuals will be affected after the new rules are introduced. Those resident in the UK for more than seven years are required to either pay UK tax, or pay an annual charge that ranges from £30,000 to £90,000, depending on how long the individual has lived in Britain. The latest figures show that in 2012-13, some 5,080 paid the annual charge. | It is unclear how many individuals will be affected after the new rules are introduced. Those resident in the UK for more than seven years are required to either pay UK tax, or pay an annual charge that ranges from £30,000 to £90,000, depending on how long the individual has lived in Britain. The latest figures show that in 2012-13, some 5,080 paid the annual charge. |
| Among Britain’s best-known non-dom families are the packaging billionaires Hans and Sigrid Rausing, the Bank of England’s Canadian governor Mark Carney the newspaper proprietor Lord Rothermere, the enrepreneurs James Caan and Richard Caring, and the children of the late Sir Jimmy Goldsmith. His son, the MP Zac Goldsmith, relinquished his non-dom status after members of parliament and the Lords were banned from using the tax perk. | Among Britain’s best-known non-dom families are the packaging billionaires Hans and Sigrid Rausing, the Bank of England’s Canadian governor Mark Carney the newspaper proprietor Lord Rothermere, the enrepreneurs James Caan and Richard Caring, and the children of the late Sir Jimmy Goldsmith. His son, the MP Zac Goldsmith, relinquished his non-dom status after members of parliament and the Lords were banned from using the tax perk. |