Non-doms pay £12.4bn in tax as numbers grow

Non-doms pay £12.4bn in tax as numbers grow

Jul 10, 2023

The number of non-doms has gone up by 10% and they paid a record £12.4bn in tax for the 2021-22 tax year

The combined tax and National Insurance contributions (NICs) tax take of £12.4bn for year ending 2022 was the largest annual tax liability for all non-domiciled and deemed domiciled taxpayers since figures were first collected in 2008. The figure was up from £7.8bn in 2020-21, marking a huge hike in tax raised.

The overall tax collected was the highest recorded, while £6.1bn was paid in income tax, capital gains tax and National Insurance contributions (NICs) in 2020-21.

In addition, the number of people registered as non-doms rose to 78,700, up 600 from the previous year’s 78,100. However, this figure has nearly halved since 2008 when there were 137,000 with non-dom status of some kind.

At the same time, the amount of remittance basis tax collected fell slightly on the previous year to £4.43bn from £4.50bn with provisional figures showing that 37,000 individuals paid the charge, down more than 10% from 44,700 in 2020. There were also indications they might be divesting of property and business interests as the amount of capital gains tax paid was £242m, up from £189m the previous year, and the highest figure since 2017.

London continued to have the largest non-domiciled taxpayer population with 57% of non-doms living in the capital, while they contributed 74% of the tax take.

In the tax year ending 2021, £739m was invested in the UK by 500 non-doms, which was down by £110m from the previous year.

Lucy Woodward, partner at Saffery Champness, said: ‘The fact that the tax liabilities paid by UK non-doms reached a record high of £12.4bn in 2021-22, despite the non-dom population lingering well below pre-pandemic levels, demonstrates that the regime is by no means generous enough to neutralise the all-consuming effects of fiscal drag, but also what a potential money-spinner the non-dom status has the potential to be for the UK Treasury.

‘Some may interpret record non-dom tax revenue as a justification to retain the regime on the grounds that to abolish or reform it beyond recognition might persuade the highly internationally mobile non-dom population to go elsewhere and take their taxable income and assets with them.

‘One recent study estimated that abolishing the non-dom regime would net £3.6bn a year for the UK Treasury, but with non-doms currently paying almost four times that, it will be hard for some to shake the feeling that reform would be a roll of the dice from which the UK coffers might not stand to gain.’

HMRC said there was some evidence of a recovery in tax collection for the year ending 2022 in newly arrived non-domiciled taxpayers following the drop in the previous tax year when taxpayers were subject to Covid-19 related travel restrictions.

The increase in numbers may also be supported by some evidence of improved retention of existing non-domiciled taxpayers compared with the previous tax year.