Labour was today still mired in confusion over whether it would abolish non-dom status.

The party vowed to scrap the centuries-old provision – intended to attract wealthy people to the UK – under Jeremy Corbyn.

After the row over Rishi Sunak‘s wife erupted last week, shadow business secretary Ed Miliband suggested that the last Labour government should have done away with non-doms.

But shadow home secretary Yvette Cooper repeatedly dodged when pressed on the policy in interviews this morning.

She told Sky News that shadow chancellor Rachel Reeves ‘has a review under way’. 

Shadow home secretary Yvette Cooper repeatedly dodged when pressed on Labour’s policy on non-doms in interviews this morning

After the row over Rishi Sunak's wife erupted last week, shadow business secretary Ed Miliband suggested that the last Labour government should have done away with non-doms

After the row over Rishi Sunak’s wife erupted last week, shadow business secretary Ed Miliband suggested that the last Labour government should have done away with non-doms

What is ‘non-dom’ status? 

Non-dom tax status typically applies to someone who was born overseas, spends much of their time in the UK but still considers another country to be their permanent residence or ‘domicile’.

In Akshata Murty’s case, she would need to be claiming that the UK is not her permanent residence.

Citizenship of an individual living in the UK is irrelevant when it comes to non-dom status as it is possible for a UK citizen, or someone born in the UK, to claim they are a non-dom.

According to Home Office guidance: ‘A person can change nationality without it affecting their domicile, or could acquire a change of domicile whilst retaining their original nationality.

‘The fact that a person has acquired a new nationality can be a relevant factor in showing a change of domicile, but is not conclusive, depending upon the reasons for the change. If a person gives up their former nationality it may suggest a change of domicile.’

Status is not given automatically because an individual must apply for the exemption in their tax status when filling out their UK tax return.

According to the Government, a person’s domicile is usually the country where their father considered his permanent home when the individual was born.

In Ms Murthy’s case, she was born in India, so she ticks the first box for claiming she is not domiciled in the UK.

Others can also inherit their domicile from their parents, meaning they can still be born in the UK but have non-dom status.

When evaluating someone’s domicile, the taxman will consider a number of factors, including permanent country of residence and how long an individual intends to stay in the UK.

When it comes to tax, the rules state that you do not pay UK tax on foreign income or gains if they are less than £2,000 a year and you do not bring them into the UK.

If you earn more than £2,000 from overseas or bring any money into the UK you must pay UK tax on it – although this may be claimed back.

Or you can pay an annual charge, depending on how long you have been in the UK.

The charges are £30,000 if you have been in the UK for at least seven of the last nine tax years, or £60,000 for at least 12 of the previous 14 tax years.

Therefore, if you are resident in the UK but a citizen of another country, you must still pay a fee.

For high net-worth individuals, many will opt for the yearly charge because the income received from foreign businesses and investments is likely to lead to a far higher tax bill.

‘We have previously proposed reforms in exactly this area,’ she said. 

Ms Cooper said it was a matter of ‘basic fairness’ that the Chancellor’s family should pay tax in the same way as everyone else and should not enjoy ‘special arrangements’ to reduce their bills.

‘I don’t think the Chancellor gets that.

‘That raises real questions about his judgment,’ she told BBC1’s Sunday Morning programme.

Ms Murthy, who remains an Indian citizen, dramatically announced on Friday that she would now pay UK taxes on all her worldwide income as she did not want her tax status to be a distraction for her husband.

It has been estimated that her non dom status could have saved her £20 million in taxes on dividends from her shares in Infosys, an Indian IT company founded by her father.

Policing minister Kit Malthouse pointed out that non-dom status has been around for ‘centuries’ and ‘allows wealthy, successful people to come from across the world and invest here in this country’. 

Mr Malthouse said it was ‘not a brilliant time’ for the details to come out when the country was struggling with a cost of living crisis, but said she had now ‘corrected’ the situation.

With some Tory MPs questioning whether any hopes Mr Sunak harboured of becoming prime minister have been dashed by the disclosures, Mr Malthouse denied that his career was ‘toast’.

‘Rishi Sunak has been a remarkable force for good in this country over the last two years.

‘He put in place some incredible support schemes during the pandemic at enormous speed,’ he said.

Governments have repeatedly looked at non-dom rules over the years, but opted to keep them in place.

In 2015 the Tory administration brought in higher annual charges for those who make use of the arrangements.  

Citizenship of an individual living in the UK is irrelevant when it comes to non-dom status as it is possible for a UK citizen, or someone born in the UK, to claim they are a non-dom.

According to Home Office guidance: ‘A person can change nationality without it affecting their domicile, or could acquire a change of domicile whilst retaining their original nationality.

‘The fact that a person has acquired a new nationality can be a relevant factor in showing a change of domicile, but is not conclusive, depending upon the reasons for the change. If a person gives up their former nationality it may suggest a change of domicile.’

Status is not given automatically because an individual must apply for the exemption in their tax status when filling out their UK tax return.

According to the Government, a person’s domicile is usually the country where their father considered his permanent home when the individual was born.

Others can also inherit their domicile from their parents, meaning they can still be born in the UK but have non-dom status.

When evaluating someone’s domicile, the taxman will consider a number of factors, including permanent country of residence and how long an individual intends to stay in the UK.

When it comes to tax, the rules state that you do not pay UK tax on foreign income or gains if they are less than £2,000 a year and you do not bring them into the UK.

If you earn more than £2,000 from overseas or bring any money into the UK you must pay UK tax on it – although this may be claimed back.

Or you can pay an annual charge, depending on how long you have been in the UK.

The charges are £30,000 if you have been in the UK for at least seven of the last nine tax years, or £60,000 for at least 12 of the previous 14 tax years.

Therefore, if you are resident in the UK but a citizen of another country, you must still pay a fee.

For high net-worth individuals, many will opt for the yearly charge because the income received from foreign businesses and investments is likely to lead to a far higher tax bill.



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