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Taxation: Non-domiciled Residents

Volume 715: debated on Monday 7 December 2009

Question

Asked by

To ask Her Majesty's Government what would be the effect on public finances of charging all individuals who indicate they are non-domiciled for tax purposes a flat fee of £25,000 per annum instead of their measures for such people. [HL75]

The overall net Exchequer yield of introducing a flat £25,000 annual levy on all resident non-domiciled individuals is displayed in the table below.

Column one shows the additional amount raised above the changes introduced at the 2007 Pre-Budget Report. Column 2 shows the amount this would raise if the Government had not introduced the 2007 Pre-Budget Report package.

Tax year

Exchequer yield relative to the post FA 2008 position

Exchequer yield relative to the pre-2008 position

2008-09

0

0

2009-10

350

1050

2010-11

150

650

2011-12

100

600

2012-13

50

550

£m nearest £50m

These figures are based on self-assessment returns for the tax year 2006-07.

It is assumed that the charge would be levied only on non-domiciled individuals who chose to pay tax on the remittance basis (as under the current FA08 rules). The remittance basis means that individuals are only liable to tax on their foreign income and gains to the extent that they are remitted to the UK. Those not wishing to pay the £25,000 charge for access to the remittance basis would be able to opt for the arising basis and pay income tax on all their foreign income whether remitted to the UK or not.

Secondly, it is assumed that the £25,000 charge will not replace all other tax liabilities on remitted foreign income and that resident non-domiciles on the remittance basis will continue to pay tax on income and gains remitted to the UK.

The revenue effect of levying a charge on all non-domiciled, both resident and non-resident, individuals is not available.