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UK closes tax loophole for high net worth Indians
High net worth Indians and other foreign-origin individuals, such as the Hinduja brothers of Hinduja Group and steel magnate Lakshmi Mittal, are likely to be hit following chancellor George Osborne’s announcement on Wednesday that a part of Britain’s 100-year-old non-domicile tax regime would be abolished from April 2017.
High net worth Indians and other foreign-origin individuals, such as the Hinduja brothers of Hinduja Group and steel magnate Lakshmi Mittal, are likely to be hit following chancellor George Osborne’s announcement on Wednesday that a part of Britain’s 100-year-old non-domicile tax regime would be abolished from April 2017.
Under current non-domicile (non-dom) rules, residents whose permanent home is deemed to be outside of the UK do not have to pay tax on any foreign income provided that they pay an annual charge ranging from £30,000 to £90,000.
At present, nearly 116,000 individuals use the non-dom facility, including individuals such as Chelsea owner Roman Abramovich. Before the May 7 election, Labour had promised to scrap the “indefensible” non-dom system.
Osborne’s announcement during the budget speech in the House of Commons did not abolish it altogether, but said those who are residents in the UK for 15 of the last 20 years would no longer be able to use the facility.
Moreover, children born in the UK to parents who are domiciled in the UK can no longer claim that their place of domicile is in India or any other country for tax purposes. That facility was launched in 1914.
“Non-dom status was meant to be temporary, but it became permanent for some people. I am today abolishing permanent non-dom tax status.
Anyone resident in the UK for more than 15 of the past 20 years will now pay full British taxes,” Osborne added. However, he justified not abolishing it altogether by saying that individuals using the facility made significant contributions to Britain’s economy. Simply abolishing it would cost Britain money, but implementing the new changes would raise £1.5 billion pounds in extra tax.
Noted industrialist Swraj Paul told HT that the development did not affect him as he paid taxes like anyone domiciled in the UK.
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