Cayman Islands, Caribbeanand International News
Sunday, Apr 14, 2024

Following Sunak’s tax evasion scandal: What is non-domicile status and who qualifies?

Following Sunak’s tax evasion scandal: What is non-domicile status and who qualifies?

How being registered as such with HMRC works and affects tax
What is non-domicile status?

A person who is registered as non-domiciled with HM Revenue and Customs is tax resident in the UK but does not have to pay UK tax on income and capital gains earned overseas – including on company stocks or cash made from selling a second home – unless they bring their money into the UK or deposit it into a UK bank account. However, non-doms do still have to pay tax on money earned within the UK.

Who qualifies as a non-dom resident?

A person with non-dom status is someone who lives in the UK and is tax resident here, but who has their permanent home outside the country. They must demonstrate to HMRC that their domicile – at least for tax purposes – is in another country. Usually their domicile will be the country that their father considered their permanent home when they were born, and to which they intend to eventually return, perhaps when they retire.

Because they are tax resident in the UK, non-doms will typically not be tax resident in their country of domicile, and therefore not liable for tax in either country on their worldwide income.

Non-doms have to specifically apply for a tax exemption on foreign income of more than £2,000, meaning it is not an automatic designation for foreign-born residents or non-citizens.

How long does the non-dom tax break last?

After a certain amount of time, non-doms must pay a hefty charge in order to continue sheltering their foreign income from UK tax. Those who have been living in the UK for at least seven of the previous nine tax years must pay £30,000 a year to the government. Those who have lived in the UK for 12 of the previous 14 tax years must pay £60,000 a year. UK residents must pay tax on their worldwide earnings once they have been in the country for 15 of the previous 20 years.

Foreign nationals who are resident in the UK can choose to pay British taxes at any point on their worldwide income and capital gains. They do not have to hold a UK passport to be taxed here.

Why is it controversial?

The rule primarily benefits the very rich, and has allowed those claiming it to avoid paying significant sums to HMRC.

A study by the London School of Economics and the University of Warwick found that more than two-fifths of people who earned £5m or more in 2018 had claimed non-dom status at some point since 1997.

Some of the highest earning non-doms work in the film industry and sport, including famous actors, directors, producers and Premier League football players, according to the report, which also found that 22% of top-earning bankers have benefited from the scheme.

Some of the highest earning non-doms work in the film industry and sport.

Which big names have claimed UK non-dom status?

Some of the most well-known people who have reportedly claimed non-dom status include Roman Abramovich, the Russian oligarch and owner of Chelsea football club now under sanctions, the steel tycoon Lakshmi Mittal and the media baron and Daily Mail owner, Lord Rothermere.

Lord Ashcroft, the multimillionaire and former deputy chairman of the Conservative party, and the former HSBC boss Stuart Gulliver were also reported to have used the non-dom scheme. The same applied to Sir James Goldsmith and his children, including the Conservative minister and longtime friend of Boris Johnson, Zac Goldsmith.

What about the chancellor’s wife?

It emerged on Wednesday that Rishi Sunak’s wife, Akshata Murty, claims non-dom status, allowing her to potentially save millions of pounds in tax on dividends collected from her family’s IT business empire.

Murty’s father is the billionaire founder of the Indian-headquartered company Infosys, in which she holds a 0.9% stake. Her non-dom status means she is not liable to pay the 39.35% tax applied to dividend payouts for UK-resident taxpayers in the highest income band.

A spokesperson for Murty confirmed she has opted to pay the £30,000 annual levy so that she is not taxed in the UK on her foreign income.

The Guardian estimates Murty has collected £54.5m (5.4bn Indian rupees) in dividends from Infosys since 2015, the earliest date for which the relevant information is available. Had she been paying UK tax on that income, she would have been liable for as much as £20m. She may not avoid UK tax indefinitely.

Under current law, Murty will automatically be deemed domiciled after living in the UK for a total of 15 years. Murty, who married Sunak in 2009, soon after they met while she was studying for a master’s in business administration at Stanford University in Silicon Valley, is understood to have moved to the UK in 2015.

Her tax arrangement is legal and it is understood the chancellor declared his wife’s status to the Cabinet Office when he took office in 2018. A spokesperson for Murty has said she “has always and will continue to pay UK taxes on all her UK income”.

However, Labour has criticised Sunak for imposing tax increases on working households while his wife benefits from a scheme that has tended to help the wealthiest in the UK avoid national levies.


Related Articles

Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
BBC Personalities Rebuke Accusations Amidst Scandal Involving Teen Exploitation
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner