Reforming the non-dom regime: revenue estimates

The location of this investment income and gains may well be different – RBUs are likely to invest less of their money in the UK due to the perverse incentives created by the remittance basis – but our approach estimates the worldwide investment income and gains of RBUs (by comparing to UK doms), and then subtracts their observed returns from UK investments that are already taxed. [...] We look at the impact of the reform on those who were in the UK prior to the reform and had resided there for at least 14 of the past 20 years. [...] To account for the likelihood that some people would have left anyway, we attribute to the reform the difference in the leaving rate for these RBUs relative to the leaving rate for RBUs who had spent only 11-13 years in the UK before the reform, so were not immediately affected by it. [...] How much revenue would be raised by abolishing or reforming the remittance basis? Abolition of the remittance basis The revenue effects of abolishing the remittance basis depend on the additional tax revenue received from taxing previously unreported income and gains for those RBUs who stay in the UK, less the existing tax paid by RBUs who leave in response to the reform. [...] Estimating the lower bound To estimate a lower bound on the amount of unremitted income and gains (Step 1, ‘How we estimate unreported income and gains’), we take into account that: (1) the individual’s unremitted income and gains must be at least £2,000; (2) claiming the remittance basis normally entails loss of the UK personal allowance, and the value of this allowance depends on the amount of t.