Tax paid by UK non-doms rose to £8.9bn in 2022-23

The amount of tax paid by people with non-dom status hit £8.9bn in the 2022-23 financial year, up 6 per cent on the previous year and the highest level since rule changes were introduced in 2017.

Statistics from the UK tax authority published on Tuesday showed the total amount of UK income tax, capital gains tax and national insurance contributions liabilities by non-doms had increased by £474mn in 2022-23.

The data also revealed an uptick in the number of non-doms to 74,000, up from 68,900 the previous year.

There is not yet any data on how non-doms are responding to the new government’s plans to abolish non-dom status and clamp down on tax privileges for those affected.

Since changes were first proposed to the regime in March by the previous Conservative government, advisers to the wealthy have reported an increase in non-doms deciding to leave the UK.

The current regime allows people resident in Britain, but with their permanent home or “domicile” outside the country, to pay UK tax only on their UK income and capital gains. They do not pay UK tax on their foreign income or gains, unless they bring these back — or “remit” them — into the country.

In its manifesto Labour said it would replace the existing rules “with a modern scheme for people genuinely in the country for a short period”. It also pledged to remove the ability of non-doms to permanently shield foreign assets held in a trust from inheritance tax.

Anthony Whatling, managing director at Alvarez & Marsal Tax, said the increase in non-dom numbers revealed in HM Revenue & Customs’ statistics was “likely to be shortlived given the Labour government’s upcoming tax reforms”.

“While it may take two years for these proposals to be reflected in official statistics, anecdotal evidence already suggests a substantial number of non-doms are seriously considering relocating from the UK,” he said.

“We have already seen several non-doms accelerate their plans to leave the UK and expect the numbers of departures to increase over the coming month,” added Elsa Littlewood, a private client tax partner at BDO, an accountancy firm.

Nicholas Hyett, investment manager at Wealth Club, said despite the statistics being a “glimpse into the past”, they showed “how important it is to get [the] new regime right”.

“£8.9bn of tax revenue is not to be sniffed at, and while taxing the rich might raise more revenue it also runs the risk that the global elite decide to move their taxable wealth somewhere with a lighter touch tax regime,” he added.

However, others welcomed Labour’s plans for tax reform.

Rachael Henry, head of advocacy and policy at Tax Justice UK, a pressure group, said: “It is only right that those choosing to make their lives in the UK, benefiting from shared services, infrastructure and opportunity, pay their fair share. This will help channel much needed revenue into the key services we all rely on like hospitals, waste collection and everything in between.”

Since 2017, individuals who are “deemed domiciled” — foreign nationals residing in the UK for at least 15 of the past 20 years — must pay tax on all income and capital gains. Annual charges apply to any foreign national who has been resident for more than seven years, but wishes still to benefit from non-dom status.

Non-doms and those deemed domiciled together contributed £12.3bn in the 2022-23 tax year, HMRC’s figures revealed, down slightly from the £12.4bn paid the previous year.