Labour’s non-dom pledge would ‘reduce UK’s attractiveness to 'internationally mobile professionals’

Tax experts have said the Labour Party’s pledge to replace ‘non-dom’ taxpayer status in the UK could make the UK less attractive to internationally mobile professionals.

Shadow chancellor Rachel Reeves told the BBC on Monday that a Labour government would end outdated tax perks, saying: “We need to do more to crackdown on some of the loopholes, which mean some of the wealthiest in society aren’t paying their fair share of tax … If you make Britain your home, you should be paying your taxes here.”

Reeves’s pledge came after the furore earlier this month over the domicile of chancellor Rishi Sunak’s wife. Akshata Murty claimed non-dom status through her billionaire father, Narayana Murty, who founded the Indian multinational IT company Infosys – a move the BBC estimated saved her £2.1m a year in UK tax on dividend payments from her shares in the company.

However, while some on Twitter challenged the language used around Labour’s proposal – arguing Labour would not be ‘abolishing’ non-dom status as widely reported, but rather replacing the current rules with a shorter-term scheme for temporary residents for up to five years (instead of the current 15 years) – some tax experts challenged whether it was a good move at all.

Tim Walford-Fitzgerald, partner at accountancy firm HW Fisher said that “in reality, the practical impact of this announcement is limited”, adding not all non-doms were “the very wealthy” and that the remittance basis “still has a place in the UK tax system”, and limiting its scope below the current 15 years “risks overlooking the human element in the decision-making process” – an example of which, he said, was that the 15 years currently available broadly matches the time taken for children to pass through the UK school system … “a commonly cited trigger point for a non-dom family to leave the UK [so] shortening this period may result in difficult family decisions being made”.

Source Financial Accountant click here to read more.