Colonial past casts shadow over “Non-Dom” status

Plus estimates on how much the Chancellor’s wife may have saved.

The “non-domicile” tax exemption regime was originally introduced in 1799 to shelter those with foreign property from the swinging taxes introduced by prime minister William Pitt the Younger.

Pitt introduced new taxes In 1786 to try to reduce the debt incurred by the American War of Independence. With the country still in debt, Pitt was also forced, in 1797,  to introduce Great Britain’s first-ever income tax. The Napoleonic wars followed almost immediately and Pitt may have seen these coming.

“Non-Dom” status, then, is an echo of our colonial past. 

It is subtly different from nationality and residence and roughly equates to the concept of “homeland”. “Non-Doms” are supposed to have strong links to that “homeland” and demonstrate intent, not to remain in Britain, but to return there. A further curiosity is that you can also inherit the status from your father.

However, if eligible, you still have to make a conscious decision to claim this status. It’s a choice.

Having lost America, the aim of the perk was to keep the new colonial rich, happy. Those who were now left propping up the empire, for example sugar farmers in Jamaica. 

It is, therefore, appropriate to consider this quirk in the light of the current debate on the legacy of slavery.

Slavery was only outlawed completely, though not entirely stopped, in the “Empire” in 1833 and emancipation was not fully achieved in the USA until 1865.

Now is surely the time to abolish this anachronism. – Owl

(Sources – various)

Akshata Murty may have avoided up to £20m in tax with non-dom status

Peter Walker www.theguardian.com (Extracts)

Rishi Sunak’s wife has potentially avoided up to £20m in UK tax by being non-domiciled and pays £30,000 a year to keep the status – revelations that come amid growing political pressure on the chancellor……

……Murty has collected about 5.4bn Indian rupees (£54.5m) in dividends from Infosys, the Indian-headquartered IT business founded by her father, over the past seven and a half years, the period for which there is public data. Non-dom status for that whole period could have saved her about £20m in UK taxes.

Last year she collected dividends of £11.6m. As a higher rate UK taxpayer she would have been expected to pay 38.1% tax on the payout, which works out at £4.4m. Before 2016, the rate was 30.6%. It rose to 39.35% this week.

One factor which could reduce the total Murty would have been eligible to pay would be any reduction under double tax treaties between the UK and India, tax experts said.

Murty’s spokesperson said they had no comment on the £20m figure beyond reiterating she paid relevant taxes on UK and overseas incomes. They accepted that people with such tax arrangements could theoretically minimise payments using tax havens, while saying they had no comment as to whether Murty did this.

Murty has previously collected other dividend income via the tax haven of Mauritius, which does not tax dividends. The spokesperson also declined to elaborate on the initial explanation for Murty’s non-dom tax status – the fact she has Indian citizenship – when this would still mean such a tax arrangement was a choice……