Abolishing the ‘Non-Dom’ Tax Rules

Labour is today setting out our plans to abolish the non-dom rules so that everyone who makes the UK their home pays UK tax.

The non-dom tax rules currently allow those at the top to pay less tax through a special set of loopholes. Someone who claims ‘non-UK domicile’ (non-dom) status currently pays no tax on income and gains they make outside the UK, even if they make the UK their home.

These rules are unfair. Working families have to pay tax on all of their income and gains, wherever it comes from. Wealthy non-doms can live in the UK for many years, but avoid paying UK tax on their income and gains made abroad.

The rules are not only used by wealthy foreigners. They are being abused by people who were born in Britain, have lived in Britain, and by any normal standards are British, to pay less tax.

In addition, the rules are supposed to allow non-doms not to pay tax on income abroad. But they are also being used to avoid tax on UK income and property – including avoiding inheritance tax on homes.

Today we have announced that Labour will:

•Abolish the non-dom rules so that everyone who makes the UK their home pays tax in the same way;

•Introduce rules for temporary residents so that only those in the UK for a short period – for example to study or through their work – would be just taxed on income and gains in the UK;

•Consult on the length of time for which the rules for temporary residents should apply and the length of time for current non-doms to re-arrange their tax affairs.

This will raise hundreds of millions of pounds because people currently claiming non-dom status in the UK will have to start paying tax on their worldwide income, but people genuinely coming to the UK for a short period will not be deterred from doing so.

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