Reforming the taxation of non- doms: policy options and uncertainties

Most recently, in 2017, the regime was changed so that UK residents who were either born in the UK to a UK-domiciled father (or mother if unmarried) or have lived in the UK for at least 15 of the past 20 years are ‘deemed domiciled’, meaning they are taxed broadly as if they were domiciled in the UK.5 People who live in the UK can therefore no longer claim the remittance basis indefinitely. [...] It is not the revenue yield from the existence of the charge, since the existence of the charge affects revenue from other taxes too: some people opt to pay tax on their worldwide income and capital gains to avoid the charge, while others decide not to live in the UK at all. [...] Wrapped up in the options are questions about who it is we want to attract to the UK (or at least not deter from coming) – do we want to attract specifically people who have large amounts of offshore wealth that they would not bring to the UK, as the current regime does, rather than (say) those who would invest in the UK or produce and earn a lot in the UK? 11 However these and other questions are. [...] To give just one specific example as an illustration, offshore income could be exempt from UK tax for the first, say, four years after a person moves to the UK (and then be taxed in full), while the proportion of a person’s estate that is subject to UK inheritance tax could be zero for the first four years and then be increased from 0% to 100% over the following, say, 10 years. [...] © The Institute for Fiscal Studies, March 2024 13 Reforming the taxation of non-doms: policy options and uncertainties and the amounts at stake in this case are modest relative to the scale of the public finances.