The Chancellor has abolished the non-dom system which allows foreign nationals who are living in the UK to avoid paying taxes on vast sums of money earned overseas.
Chancellor Jeremy Hunt, on non-doms, told MPs on Wednesday, “Recognising the contribution many of these individuals have made to our economy, we will put in place transitional arrangements for those benefitting from the current regime.
“That will include a two-year period in which individuals will be encouraged to bring wealth earned overseas to the UK where it can be spent and invested here – a measure that will attract onshore an additional £15 billion of foreign income and generate more than £1 billion of extra tax.
“Overall abolishing non-dom status will raise £2.7 billion a year by the end of the forecast period, money the party opposite (Labour) planned to use for spending increases, but today a Conservative government makes a different choice. We use that revenue to help cut taxes on working families.”
Hunt added, “Nigel Lawson wanted to end the non-dom regime in his great tax reforming budget of 1988 which is where I suspect the Labour Party got the idea from.
“I too have always believed that provided we protect the UK’s attractiveness to international investors, those with the broadest shoulders should pay their fair share.
“After looking at the issue over many months, I have concluded that we can indeed introduce a system which is both fairer and remains competitive with other countries.
“So the Government will abolish the current tax system for non-doms, get rid of the outdated concept of domicile…”
The Chancellor was heckled by Labour MPs, he said, “I aim to please all sides of the House in all my budgets. And will replace the non-dom regime with a modern, simpler and fairer residency-based system.
“From April 2025, new arrivals to the UK will not be required to pay any tax on foreign income and gains for their first four years of UK residency, a more generous regime than at present and one of the most attractive offers in Europe.
“But after four years, those who continue to live in the UK will pay the same tax as other UK residents.”
IFS director Paul Johnson welcomed the Chancellor’s move, he posted, “Wow – *abolishing* non dom regime. Removing outdated concept of ‘domicile’ and replacing with residence based system.
“Good. Lots of detail to see here.
“‘Flipping’ regime to encourage people to bring money here rather than providing the tax relief for income earned abroad.”
