Factbox: What is Britain’s non-dom tax status and who can claim it?

April 8 (Reuters) – Britain’s Finance Minister Rishi Sunak has come under fire over the “non-domiciled” tax status of his Indian wife Akshata Murthy, meaning she pays no tax in Britain on her income abroad. Read more

Non-dom status is controversial in Britain because it is an option for very few taxpayers and is heavily used by the top 1%, for whom it can facilitate tax avoidance.

The system, which is separate from being resident, is unusual among other major Western countries.

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Who can be non-domiciled?

Being non-domiciled is a tax status that can be used by someone who lives in Britain but has a “primary connection” – basically, their permanent home – outside the country, according to the guidelines. UK tax.

If someone is not domiciled, then they can choose to pay a fee to be allowed to pay tax on an installment basis, i.e. only on the income they bring into the UK United.

A non-domiciled natural person must choose whether to pay tax on the basis of installments or on his overall income. Sunak married Murthy in 2009 and the couple moved to Britain in 2013, the i newspaper reported.

What does it mean?

A ‘non-dom’ can choose not to have to pay UK tax on income or capital gains earned overseas unless they bring their money into Britain. They still have to pay tax in Britain on money earned in Britain.

Why is this controversial?

It can favor wealthy people who earn income outside Britain, allowing them to benefit from lower tax rates abroad.

This has made him a target for those who say the UK tax system benefits the wealthy, and the term “non-dom” is often used by the media as a pejorative term.

The opposition Labor Party has previously called for the statute to be scrapped altogether. The ruling Conservatives, responding to public anger at this perceived injustice, announced stricter eligibility criteria in 2015.

Who is eligible?

To qualify as non-domiciled, a person must prove that their domicile is in another country. A domicile generally refers to the country that a person’s father considered his permanent residence when he was born.

A person can only be considered undomiciled for up to 15 years while living in Britain.

To pay tax on an installment basis there is a fee of £30,000 a year, up to £60,000 for those who have been resident in Britain for at least 12 years. Permanent non-dom status was abolished in 2017.

How many non-doms are there?

There are more than 75,000 foreign nationals, mostly, according to government data. A study this week showed that more than one in five bankers earning at least 125,000 pounds ($164,000) a year in Britain have enjoyed non-domiciled tax status in the past. Read more

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Reporting by Farouq Suleiman; additional reporting by David Milliken; edited by William James and Angus MacSwan

Our standards: The Thomson Reuters Trust Principles.


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