Non-dom tax law to be reviewed

The government has promised to review the taxation of non-domiciled individuals to make sure they are making a fair contribution to the UK.

The review, which will affect individuals who live in the UK but have interests and wealth overseas, had been hinted at in the Conservative and Liberal Democrat party coalition agreement.

‘This will assess whether changes can be made to the current rules to ensure that non-dom individuals make a fair contribution to reducing the deficit, in return for greater certainty and stability for those bringing skills and investment to the UK,’ reads the Budget.

The previous Labour government introduced the current rules for non-doms, which put a £30,000 levy on foreign individuals who had assets overseas but had lived in the UK for seven out of the 10 ten years. Non-doms can choose to pay the flat rate charge or the normal UK taxes which are paid by domiciles. 

The rules have proved controversial over the last two years, with the tax status of Tory peer Lord Ashcroft a major issue in the last election campaign. Lord Ashcroft was forced to confirm he was non-domicile and did not pay UK tax on his earnings abroad following a series of reports.  

The government was understood to have considered introducing a one-off £100,000 entry tax on non-doms, said David Kilshaw, head of private client advisory at KPMG, speaking ahead of the Budget.  

Chancellor George Osborne (pictured) had also been tipped to make non-doms eligible for inheritance tax on foreign assets after they have lived in the UK for seven out of the last nine years. Non-doms are only liable for inheritance tax under the current rules if they have in the UK for 17 of the last 20 years.