What is non-domiciled status and why does it lower taxes?

The financial affairs of Rishi Sunak and his multi-millionaire face intense scrutiny after it was revealed she saved “millions” in tax payments by claiming non-domicile status.

Accordingly The Independent, Akshata Murthy, a fashion designer and shareholder of her father’s multibillion-dollar IT services company, used her “non-domicile status to save on her tax bills while her husband was chancellor.” It is “not known exactly how much was saved” but sources told the newspaper that “it could have saved her millions of pounds in taxes on foreign income over a number of years”.

A spokesman for Murthy said that BBC that she paid all her taxes legally in the UK. But Tulip Siddiq, Labor’s shadow economy secretary at the Treasury, urged Sunak to “urge to explain how much he and his family have saved on their own tax bill,” while introducing: “Tax increase after tax increase on the British people”.

What is non-dom status?

Non-domiciled status, often referred to as ‘non-dom’ status, “can protect a person from paying UK tax on income from dividends from overseas investments, rent payments on property abroad or bank interest,” said The Independent.

It’s perfectly legal and also means those claiming it can avoid UK inheritance tax. Unlike non-residents, non-doms can live in the UK 365 days a year.

Roman Abramovichthe Russian oligarch who owns Chelsea football club, Lakshmi Mittal, the Indian steel magnate and media baron Viscount Rothermere have all used non-dom status to “avoid paying significant sums to HMRC”. The guard reported.

Her spokeswoman confirmed that “under UK law Ms Murty is treated as a non-resident for UK tax purposes” and said that “she has always had to and will continue to pay UK tax on all of her UK income”.

They added: “India does not allow its citizens to hold the citizenship of another country at the same time”, meaning that “under UK law Ms Murty is treated as a non-resident for UK tax purposes”.

However, non-dom status is optional. Nimesh Shah, chief executive of accounting firm Blick Rothenberg, said The times: “If you state on a tax return that you intend to live in the UK and you will not return to your country of origin, you will be treated as British for tax purposes and you will lose your country of origin.”

How many people have Non-Dom status?

A learn recently revealed that the number of people who had ever claimed Non-Dom status in the UK rose from 162,000 in 2001 to 238,000 in 2018.

Analysis of HMRC data, conducted by the London School of Economics and the University of Warwick, also revealed that non-doms made up more than 12% of residents in Kensington, the city of London and Westminster in 2018.

Outside the capital, some of the highest figures were found in Oxford and Cambridge, where they accounted for more than 1% of the population in two general constituencies.

The study also found that non-doms make up two-fifths of top earners – those earning over £125,000 a year – in the oil sector, as well as a quarter of workers in the auto industry and a sixth of workers in film and sport.

With more than 93% of foreign-born non-doms, Indian non-doms are growing the fastest, from 4% of the total in 2001 (3,200) to 14% in 2018 (22,700).

https://www.theweek.co.uk/news/uk-news/956353/what-is-non-domiciled-status-why-does-it-cut-tax What is non-domiciled status and why does it lower taxes?

Fry Electronics Team

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