Nd How bankers and foot­ballers can shel­ter their money

Kalyeena Makor­toff

What is non-dom­i­cile status?
A per­son who is registered as non-dom­i­ciled with HM Rev­enue and Cus­toms (HMRC) is tax res­id­ent in the UK but does not have to pay UK tax on income and cap­ital gains earned over­seas – includ­ing on com­pany stocks or cash made from selling a second home – unless they bring their money into the UK or deposit it into a UK bank account. However, non-doms do still have to pay tax on money earned within the UK.
Who qual­i­fies?
A per­son with non-dom status is someone who lives in the UK and is tax res­id­ent here, but who has their per­man­ent home out­side the coun­try. They must demon­strate to HMRC that their dom­i­cile – at least for tax pur­poses – is in another coun­try. Usu­ally their dom­i­cile will be the coun­try that their father con­sidered their per­man­ent home when they were born, and to which they intend to even­tu­ally return.
Because they are tax res­id­ent in the UK, non-doms will typ­ic­ally not be tax res­id­ent in their coun­try of dom­i­cile, and not liable for tax in either coun­try on their world­wide income.
Non-doms have to spe­cific­ally apply for a tax exemp­tion on for­eign income of more than £2,000, mean­ing it is not an auto­matic des­ig­na­tion for for­eign­born res­id­ents or non-cit­izens.
How long does the tax break last?
After a cer­tain amount of time, non-doms must pay a charge in order to con­tinue shel­ter­ing their for­eign income from UK tax. Those who have been liv­ing in the UK for at least seven of the pre­vi­ous nine tax years must pay £30,000 a year to the gov­ern­ment. Those who have lived in the UK for 12 of the pre­vi­ous 14 tax years must pay £60,000 a year. UK res­id­ents must pay tax on their world­wide earn­ings once they have been in the coun­try for 15 of the pre­vi­ous 20 years.
For­eign nation­als who are res­id­ent in the UK can choose to pay Brit­ish taxes at any point on their world­wide income and cap­ital gains. They do not have to hold a UK pass­port to be taxed here.
Why is it con­tro­ver­sial?
The rule primar­ily bene­fits the very rich, and has allowed those claim­ing it to avoid pay­ing sig­ni­fic­ant sums to HMRC.
A study by the Lon­don School of Eco­nom­ics and the Uni­versity of War­wick found that more than two-fifths of people who earned £5m or more in 2018 had claimed non-dom status at some point since 1997.
Which big names have claimed?
Some of the most well-known people who have reportedly claimed non-dom status include Roman Abramovich, the Rus­sian olig­arch and former owner of Chelsea foot­ball club, now under sanc­tions, the steel tycoon Lak­shmi Mit­tal and the media baron and Daily Mail owner, Lord Rothermere.
Akshata Murty, the wife of the ex-prime min­is­ter and chan­cel­lor Rishi Sunak and daugh­ter of Indian IT bil­lion­aire NR Naray­ana Murthy, also claimed non­dom­i­ciled status.
Lord Ash­croft, mul­ti­mil­lion­aire and former deputy chair of the Con­ser­vat­ive party, and the former HSBC boss Stu­art Gul­li­ver were also repor­ted to have used the non-dom scheme. The same applied to Sir James Gold­smith and his chil­dren, includ­ing the Con­ser­vat­ive min­is­ter and long­time friend of Boris John­son, Zac Gold­smith.

The Guardian