Labour pledges to abolish non-domicile tax rule

08 April 2015

A Labour government would abolish the non-domicile rule that allows some wealthy UK residents to limit the tax paid on earnings outside the country.

BBC news has reported that Ed Miliband said the non-dom rules were "indefensible" in the 21st Century and made Britain "an offshore tax haven".

Shadow Chancellor Ed Balls said the move could raise "hundreds of millions of pounds". But as recently as January, he said it "would end up costing Britain money" because people would leave the country.

The BBC's assistant political editor Norman Smith said the comments, in a BBC interview ahead of the election campaign, appeared to contradict what he and his leader were saying now about the party's most significant announcement of the campaign so far.

And Chancellor George Osborne said they were an example of the "economic confusion" that would result from a Labour government.

Non-doms are defined as British residents who pay tax on their UK earnings but whose permanent home is deemed to be outside the UK and therefore do not have to pay UK tax on foreign income as long as they do not transfer it to the UK - they pay a charge of at least £30,000 instead of paying tax as a UK resident.


CIPP comment

In July 2014 the Treasury launched a consultation on possible restrictions in the personal allowance for non-residents. This consultation began at stage 1 where it looked to set out initial objectives and identify options. The CIPP contributed to this consultation through a membership survey. A government response has not yet been published.

We would hope that if, after the General Election, the non-domicile rules are to be changed, that a formal consultation will take place.