The announcement by the Government to change the basis of taxation for non-doms initially sent shock waves through that somewhat elite community particularly in the City of London. Bankers and their ilk, sent over by their employers from all over the world, had settled very comfortably in multi-cultural Britain with their stay here made all the more comfortable by the generous tax systems that effectively enabled non-doms to avoid tax in the UK on all but income generated here. This enabled a whole industry to be built up creating remuneration packages outside the UK to benefit such individuals.
The new systems, with a flat rate tax for non-doms, was expected to have some impact on that community who, combined with the high cost of living, particularly in London, were thought to perhaps be likely to leave our shores. So it was interesting to read a recent article suggesting that the mass exodus just simply hasn’t happened. Whether its our temperate weather, our excellent restaurants, theatres, galleries and concerts, the schooling or even our green spaces is not clear, but so far, it seems that they are all staying put.
The significance of this is more than just a matter of idle speculation. Such individuals, despite criticism in the press for their “special tax status”, have spent billions of pounds in the UK.
Experts do however feel that this may be a situation that will change over time. It is not that easy just to up sticks and leave the UK particularly if you’ve bought property here and have children at school.
Whilst over the long term, it seems likely that there will be a gradual departure, what is of more importance is that the numbers actually coming here are likely to fall dramatically. The current economic climate also doesn’t help with this.
Of course, the matter is more complicated by the fact that some non-doms may have been here for 15 years or more and in many ways, see the UK as their home. This is particularly the case where perhaps they left under the rules of asylum or simply in the face of unacceptable political systems. This particularly applies to people who have come here over the years from such countries as South Africa, Iran and Iraq and from certain countries in Eastern Europe. Their privileged status as non-doms, was a useful side effect and not their intention in coming in the first place. These people can’t really go anywhere else and will simply have to swallow the new tax changes if they are affected. For the rest of us, mere mortals born in the UK and definitely domiciled here, we just have to accept the fact that we are always going to be taxed on your world wide income, despite the number of people who still think that they can “hide” their income off-shore.