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Taxation: Personal Residence

Volume 718: debated on Monday 22 March 2010

Question

Asked By

To ask Her Majesty’s Government what further legislation they propose to deal with tax and personal residence.

My Lords, the Government reformed the rules governing the taxation of individuals who are resident but not domiciled in the United Kingdom in 2008. The Government have also introduced legislation to deem that all MPs and Members of the House of Lords be resident, ordinarily resident and domiciled in the UK for tax purposes.

My Lords, I thank my noble friend for his Answer. I am sure that he is aware that the issue of residence, or rather non-residence, remains very unclear. That of domicile is even more complex. I note what he says about Members of both Houses, which I assume has all-party agreement. If that does not go through in the current legislation, I assume it will go through in what is called “the wash-up”. More importantly, why do we not abolish the concept of non-domicile for everyone, leaving the question of residence as the only form of legislation on this matter on the statute book?

My Lords, my noble friend, as always, asks several questions. I believe that the proposal in respect of domicile and membership of Parliament, and particularly of the House of Lords, has all-party support. The concept of non-domiciles brings great benefit to the UK economy. It allows people to come here to work for a time, supporting the UK economy—particularly, but not exclusively, our service and cultural sectors, which are considerable beneficiaries of the non-domicile approach—but it does not subject them to taxation in the UK on their non-UK income, unless they have remained here for more than seven out of the past nine years.

On residency, my honourable friend the Financial Secretary in the other place has spoken about the desirability of putting the residency test on a statutory basis and consideration continues to be given to that subject.

My Lords, as so often, the noble Lord, Lord Barnett, and we on these Benches speak with one voice. Does the Minister agree with Cathy Newman’s first-class FactCheck analysis on Channel 4 that there are clouds of uncertainty about how much money a non-dom tax would raise? Instead of a non-dom tax, a poll tax of £25,000 or £30,000 a year—a flea bite for the super-rich—why not charge everyone who has lived here for seven years full British tax? If you are in the club, why should you not pay the subscription?

My Lords, I think the noble Lord misdirects himself and the House as regards the amount of money raised from non-domiciled individuals. More people have registered under the remittance tax basis for non-domicile treatment than we anticipated and our estimate is that the UK revenue achieves something in excess of £6 billion a year from non-domiciles. There are real advantages to the UK economy of allowing that status to continue. We have no current plans, either for the lifetime of this Parliament or for the duration of the next Parliament, to revisit the remittance basis of taxation.