Non-Domiciles Face Red Mist

Ed Miliband and the British Labour Party plan to rearrange the non-domiciles’ status and the accompanying tax relief given to some of the most prominent and influential people living in the UK.

Around 116,000 residents are living as “non-domiciles”.

Those residents either do not claim Britain as their permanent home or they have presented evidence that they have strong ties to another country, usually through parentage, that they plan on returning to. William Pitt the Younger introduced this status in the late 18^th century and it continues today to allow “non-doms” to live in the UK but to pay taxes only on the British portion of their income.

The Labour Party believes that non-dom status should be eliminated to create a level playing field for taxing. They want to put an end to those who are living in the stability and good infrastructure of Britain while holding most of their wealth abroad and untaxed. Taxing the rich to benefit the middle class is also a popular campaigning strategy.

On the other hand, the abolishment of the status could have serious negative repercussions for London. The reprieve given by the status contributes to the multicultural prestige that has been created and enjoyed throughout the city of London. Adversaries of the abolishment predict that many wealthy and talented non-doms will leave UK without the encouragement of tax relief to stay. If these wealthy foreigners leave, it will negatively effect UK investment and job creation. It could also lead to a house-price crash in London and, overall, it would mean less tax revenue. In fact, non-doms paid £6.18bn in income tax alone in 2012-13.

While no one will argue that the tax evasion of some of Britain’s elite should go unaddressed during the upcoming election, the Labour Party could just be doing more damage than repair in their effect to introduce fairness into the tax system.

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