Non-dom resident numbers continue to fall,

Non-dom resident numbers continue to fall, down 11% annually

Research from RIFT Tax Refunds has revealed that the decline in the level of UK non-domiciled taxpayers spurred by the EU Referendum, as well as a raft of tax related changes concerning non-doms, has so far shown no signs of slowing, with a 10.7% annual drop in non-dom numbers, down 44.5% since the 2015 peak.

RIFT Tax Refunds analysed the latest government data on the number of non-domiciled taxpayers both with and without UK residents status, the sum of tax paid and how this has changed since a peak in non-dom resident numbers in 2015.

Since this peak, non-dom numbers have been in steady decline following the EU Referendum, as well as the introduction of a host of non-dom related tax changes, including the abolition of non-dom status, additional tax obligations for formerly domiciled residents and an extended reach of the inheritance tax laws on residential property.

The latest figures show that there are some 68,300 non-domiciled taxpayers in the UK, 80% of which are UK residents, with the vast majority also living in London (57.6%).

This is 44.5% fewer compared to a peak in numbers seen in 2015 when there were 123,000 registered non-domiciled taxpayers. The latest figures also show that there has been a 10.7% annual decline in non-dom numbers, the third largest annual decline seen since 2015.

When looking at the number of non-domiciled taxpayers who specifically hold UK residency, there has also been a decline of 13.2% annually and 36.9% since 2015.

At the same time, there has been a 17.3% drop in the level of income tax paid by non-dom taxpayers when compared to 2015, increasing by just 0.9% in the last year. There has also been a decline in the sum of national insurance contributions made, down 6.4% annually and 15.2% since 2015, reinforcing the fact that far fewer are choosing to live and work within the UK.

What’s more, the level of capital gains tax paid by non-domiciled taxpayers has increased by 39.4% in the last year, reaching the second largest annual total since a 2017 spike following the EU Referendum.

When looking specifically at non-doms with UK residency, this annual increase in capital gains tax climbs further to 32.4%, up 40.8% since 2015, suggesting that many may have offloaded the more permanent links tying them to the UK, such as property or other investment assets.

CEO of RIFT Tax Refunds, Bradley Post, commented:

“The number of non-doms within the UK has steadily been declining since 2015 and this has been largely due to changes to tax structures for non-domiciled taxpayers which were first consulted on in 2015 before their implementation in 2017.

Their aim was to prevent many wealthy foreign nationals from taking advantage of the benefits of UK residency, while paying very little in taxes. This has clearly had the intended effect, with the level of both income tax and national insurance paid by non-doms declining notably, while it appears many have also offloaded their permanent ties to the UK with a sizeable spike in capital gains tax paid.

The EU Referendum and our exit from the EU in 2020 have no doubt contributed to this continued trend. However, with the economic outlook now looking rather bleak, to say the least, the tax that non-doms do contribute to the economy, as well as the money they spend while residing here, may well be missed.”