Labour is today setting out our plans to abolish the non-dom rules so that everyone who makes the UK their home pays UK tax. Britain will only succeed when working people succeed. That means everyone playing by the same rules. But the non-dom tax rules allow those at the top to pay less tax through a special set of loopholes not available to most people. That's not fair - it means working people have to pay more.
The non-dom rules are unfair.
- The vast majority of working people have to pay tax on all of their income and gains, wherever it comes from. Wealthy non-doms can live in the UK for many years, but avoid paying UK tax on income made abroad.
The non-dom rules are ridiculous.
- The rules are not only used by foreigners, but by people who by any normal standards are British, so that they can pay less tax.
- People born here, brought up here and living here can claim non-dom status if their father was born abroad.
- People born and brought up here, who live abroad for a while and then move back to the UK, can claim non-dom status if they say they plan to move abroad again in future, and do simple things like buy an overseas burial plot or subscribe to foreign newspapers.
The non-dom rules are abused.
- The rules are supposed to allow non-doms not to pay tax on income from abroad. But they are also being used to avoid tax on UK income and property.
- Non-doms can use offshore trusts to buy expensive UK homes and avoid inheritance tax.
Labour will abolish non-dom tax status. Labour will abolish the non-dom rules and replace them with a system where everyone who makes the UK their home pays full UK tax, and only those who are genuinely temporarily resident in the UK - like students, or people who spend a short time here on business - can be taxed on just their UK income.
By closing down these loopholes Labour will raise hundreds of millions of pounds in additional tax revenue, which will be used for reducing the deficit. And we will send a clear message that everyone, however wealthy they are, should play by the same rules.