“Non-domiciled” foreigners to face an annual £30,000 charge
Chancellor announces proposals to tighten up the rules

Wealthy “non-domiciled” foreigners who have been in Britain for seven years face an annual £30,000 charge for staying outside the tax system. Otherwise they could have to pay income tax on their offshore assets of as much as 40 per cent.

The Chancellor said that the new rules were aimed at “preventing people claiming that they are out of the country when they are actually here, from disguising income as capital and from claiming in effect two allowances.” The Chancellor’s proposals include modifications to the so-called “90 day” residency rule for taxpayers.

Non-domiciled taxpayers are being given an invidious choice between a £30,000 flat-rate charge, which they must pay year on year, or calculating worldwide income and gains. By amending some highly technical definitions, the Chancellor is also tightening what will be counted even if you pay the £30,000. As well as the tax, internationally mobile individuals are going to have an increased compliance burden.

Under the proposals, put out to consultation, any non-domiciled foreigner who wants to claim their status will not be entitled to a personal tax allowance. The Treasury said that this would affect about 113,000 people.

The charge would apply to individuals resident in Britain for seven years. The Chancellor also said that he wanted further to tighten non-dom rules for those resident here for more than ten years.

Non-doms, he added, contributed £4 billion in taxes and any reform of the current system had to be “fair, workable and affordable.”

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