Rich non-doms are unlikely to mount a mass exodus from UK
wealthy individuals warning that the change will cause an exodus of the super-rich. A survey this month showed that abolition could cost the country almost £1 billion ($1.3 billion) in lost revenue rather than the £3 billion boost initially predicted. Anecdotal evidence suggests some financiers are already heading to the more tax-friendly climes of Dubai, Switzerland or Italy. Even so, the concerns may prove overstated.
People who live in the UK but who can plausibly claim somewhere else is their permanent home, or domicile, may opt for a special tax treatment known as the “remittance basis,” which exempts them from paying anything on foreign income or capital gains unless these are brought into the country. Until now, non-domiciled individuals have also been exempt from inheritance tax on their overseas wealth, whereas UK-domiciled residents are liable to pay a rate of 40% (after allowances) on their worldwide assets.
It’s a system that confers significant tax benefits, which become more lucrative the wealthier you are. It’s also an anachronism that should have been scrapped long ago. The origins of the non-dom regime stretch back to 1799, when Prime Minister William Pitt the Younger imposed the first income tax to finance the Napoleonic Wars. It was intended as a deferral for colonial plantation owners, who would be taxed on the income from sugar, tobacco and cotton shipments only when they received the funds. That evolved later into an exemption.
The system is riddled with absurdities. To begin with, domicile
