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Until April of this year, it was possible for a foreign national to be resident but not domiciled in the UK. Any income they earned in the UK would be subject t

Until April of this year, it was possible for a foreign national to be resident but not domiciled in the UK. Any income they earned in the UK would be subject to UK tax, but income earned abroad would not be. These non-domiciled foreign nationals could "live" in Dubai (or any other country) for tax purposes, but actually live in the UK in every practical sense. The removal of this non-domiciled status is clearly far more significant than a normal tax increase. The UK was a uniquely attractive destination for the super-rich, because they could enjoy all the amenities of living in London with no real concerns about the tax implications. It is plausible that many of those people will decide to pay UK tax rather than move abroad, but we are talking about an exceptionally highly-mobile group who have already made the decision to move country, many primarily or solely for tax reasons.

whatshisface 1y ago
Isn't the defining characteristic of the wealthiest demographic their ability to pay for things that they want (like living in London) without any concern over the cost of doing it?
- earnesti 1y ago
  I don't think these people would be superrich if they wouldn't be optimizing their taxes, at least at some level. I would guess taxes are the typically the biggest single expense the really rich people pay.
  - tristramb 1y ago
    I would have thought that being superrich would free you from worrying about 'optimizing your taxes'.
    - grues-dinner 1y ago
      I would think so, but perhaps for the people who are self-defined by the magnitude of their wealth they become more and more obsessed by it as their expenditures on "real" things dwindles in comparison.
- KaiserPro 1y ago
  > without any concern over the cost of doing it? indeed thats why to have accountants and lawyers, the issue here is that non-dom meant that you could avoid paying tax on stuff you earnt outside of the UK. for example if you have a lot of income being generated in the USA, then being a non-dom meant that you could avoid paying tax here in the UK at the same time. For US citizens its a bit harder, as you're liable for tax on all income, regardless of source. I'm not sure how they get round that, debt financing or something similar I imagine
  - SilverElfin 1y ago
    What’s the problem with that? Why should the UK or any country have a claim to money people are making elsewhere?
    - KaiserPro 1y ago
      I think its an issue of fairness. I, as a rich techbro, but not an Uber rich techbro, have to pay ~46% of my income in tax. (even though the majority comes from the US in USD) Don't get me wrong, I earn a fucking kings ransom, and I don't mind paying that amount of tax. but. If I was earning maybe 4x that amount, I could probably avoid a whole bunch of tax. It doesn't seem correct that the richer you get, the more optional tax is.
      - maccard 1y ago
        The thing is it’s not even 4x that amount, it’s more like 20x that amount.
        KaiserPro 1y ago
        Having listened to my more senior colleagues, it wasn't that much more. If you own your own company, or have the ability to change your contract, its probably a lot less.
    - itsmek 1y ago
      Because physical presence incurs costs to taxpayer funded infrastructure? Why should I be able to dodge taxes by working remotely abroad? Are you saying independently wealthy people should be able to roam around and freeload without paying tax to their resident nation? In the US many people falsely believe illegal immigrants do exactly that, and that lie has contributed to a lot of outrage, so obviously people perceive the system you're proposing as unjust.
- throwmeaway222 1y ago
  I imagine the exodus was where the corporation is incorporated. And on paper someone with billions of dollars now has a mere 500k. Or whatever loophole their lawyers decided to figure out.
- hermitcrab 1y ago
  Yes, but if they have to pay a fair amount of tax they will only be able to afford a 40 metre yacht, rather than the 50 metre yachts that all their frenemies have and that just won't do.
- roncesvalles 1y ago
  That's exactly what I don't get. If you're a billionaire and your whole lifestyle goes topsy-turvy because of some new legislation, what's the point of being a billionaire? E.g. Lakshmi Mittal, one of the richest persons in the UK, was rumored to consider moving to the UAE because of the non-dom rule changes.[1] To me it's ridiculous that a person this rich feels such weak control over where they should live. And it's not like moving from the UK to the UAE is like moving from Switzerland to Austria. It's a humongous upset by most measures. [1] https://www.cityam.com/steel-billionaire-lakshmi-mittal-to-ditch-uk-after-non-dom-crackdown/ https://www.cityam.com/steel-billionaire-lakshmi-mittal-to-d...
- anywhichway 1y ago
  No, just the opposite. In general, the things wealthy people buy (luxuries) experience much larger swings in demand due to price changes like added taxes (in economic terms, "the elasticity of demand"). It's because they are only wants and not needs. They are also usually easily swapped. Instead of buying your wife those diamond earrings, you could get her a painting or a trip to Spain. And rich people are often very money savvy. It's the necessities that people will continue to buy (or at least replace with close substitutes), regardless of what happens to the price. Obviously, in this case it worked out much differently, but no, in general you can't say the wealthy people don't respond to price changes due to their wealth.
gadders 1y ago
Weren't there other restrictions as well? i.e could only stay 90 days at a time etc.
- Nursie 1y ago
  It is/was several years for “non-Dom” status people. That’s one of the reasons it was seen as such a scam. You’re living there like everyone else yet using this niche status to avoid paying tax.
- Nursie 1y ago
  To expand on my previous answer, the rules about non-dom were - https://www.bbc.com/news/business-32216346 https://www.bbc.com/news/business-32216346 "If you are a non-dom ... and you choose not to pay tax in the UK on your overseas earnings, you must pay: £30,000 if you've been here for at least seven of the previous nine tax years £60,000 for at least 12 of the previous 14 tax years" Which means that someone like the wife of previous Prime Minister Rishi Sunak could live in the UK, more or less indefinitely, and pay pretty much no income tax for seven years, then a very middle-class-salaried amount of tax where her earnings could actually be in the many millions. And as non-doms are tax resident in the UK, often they are also not taxed in the country where their money is earned. It's a great big tax dodge and the rest of the UK population was pretty sick of it.
graemep 1y ago
There may have been a gain to attracting super-rich people to live in the UK historically (this is an OLD rule) however people no longer necessarily invest where they live so the benefit is far more limited, and is offset by effects such as making property in London a lot more expensive for everyone else. In any case the super-rich are only taxed on income they take out of their businesses. That also limits the benefits of both attracting them, and of exempting them. I do not see any evidence that there was a net benefit from this exemption.
- nobodyandproud 1y ago
  > however people no longer necessarily invest where they live This is a problem. The UK is experiencing what the US is experiencing so I hope you don't mind. I'm all invested in the US. My citizenship, my family ties, my finances, and my language. Immigrating to a five-eyes nation would be far easier for me (racism aside). There's no going back for me and my family, unless I want to immigrate out and start from the very bottom with absolutely nothing. Because I'm a naturalized US citizen and I'm not white, I also harbor no illusions: There's every reason to believe that if this administration and its extremists continue down its trajectory, I and my family will eventually be subject to the worst. I'm also not wealthy: So it's in my best interest to be a moderating voice, fight for the values that define my home, be seen giving back/paying it forward, and push for the best outcome for my home. I'm not sure how to quantify the value add of this, and the wealthy transnationals who distinctly take without being a net positive--because they can so easily relocate--are a large part of the problem.
  - graemep 1y ago
    I am not sure we are talking about the same thing. > The UK is experiencing what the US is experiencing so I hope you don't mind. Depends in what way? Economically, in some ways. Socially and politically not. > I'm all invested in the US. My citizenship, my family ties, my finances, and my language I assume you are saying that to agree with me, in that the super-rich are never invested in one country the same way. However, I meant invested literally, not metaphorically. Where you invest your money. > I'm not sure how to quantify the value add of this, and the wealthy transnationals who distinctly take without being a net positive--because they can so easily relocate Wealthy individuals can relocate. Businesses can relocate some things, but their actual operations are tied to physical assets and to where their employees live.
palmotea 1y ago
> The removal of this non-domiciled status is clearly far more significant than a normal tax increase. The UK was a uniquely attractive destination for the super-rich, because they could enjoy all the amenities of living in London with no real concerns about the tax implications. It is plausible that many of those people will decide to pay UK tax rather than move abroad, but we are talking about an exceptionally highly-mobile group who have already made the decision to move country, many primarily or solely for tax reasons. Boo hoo, let them move to some remote tax haven then, and live there next to their money and incorporation documents.
- brainwad 1y ago
  If that would have been the actual response, it wouldn't have made sense to proceed with the reform. The goal of treasury should be to maximise social welfare, not lose tax money just to dunk on the ultrarich.
  - hermitcrab 1y ago
    But a lot of them are paying little or no tax anyway, due to trusts, shell companies and other financial engineering.
    - bluecalm 1y ago
      If they come and live in 10M house it's 300k/year right there if you tax properties/land (you can use progressive rate so it's higher on most valuable properties). Add consumption taxes and every rich Chinese/Arab kid is sponsoring welfare for few dozens people per year.
      - hermitcrab 1y ago
        The yearly council tax of a £10M house in central London is the same as a £320K house: https://www.westminster.gov.uk/council-tax/council-tax-bands-and-charges https://www.westminster.gov.uk/council-tax/council-tax-bands... So where did you get £300K/year from? Or are you saying that is what it should be?
sgt101 1y ago
But whatever happens the uk will not lose tax income from these people. Yes, they will not buy expensive property. Yes they will not buy designer goods... but if they leave will the impact on the average citizen be at all significant?
- dh2022 1y ago
  Exactly. These people did not come to create new companies, employ people, come up with new products. These people came to London to party, not to contribute. They will take their party with them, but not their contributions - because there are none.
  - hermitcrab 1y ago
    And have less super wealthy people buying properties that they mostly don't live in will lower property costs for everyone else. The only people who will lose is the ecosystem of lawyers, accountants, estate agents and assorted remoras that service the super rich.
maccard 1y ago
Those people are already not paying tax in the UK though. The former PM’s wife has saved more in tax because of her status than everyone who works in my company combined will pay in income tax in their entire lives.
- hermitcrab 1y ago
  Indeed. The millionaires that are whining about paying their fair share of tax can ** off and not pay their taxes somewhere else. Good riddance.
  - ghusto 1y ago
    Exactly this. All this talk of "oh but all the rich people will leave and investment will dry up" is really cover for "but my friends don't want to pay tax". We lose nothing (good) by them leaving, if indeed they would anyway.

whatshisface 1y ago

Isn't the defining characteristic of the wealthiest demographic their ability to pay for things that they want (like living in London) without any concern over the cost of doing it?

earnesti 1y ago
I don't think these people would be superrich if they wouldn't be optimizing their taxes, at least at some level. I would guess taxes are the typically the biggest single expense the really rich people pay.
- tristramb 1y ago
  I would have thought that being superrich would free you from worrying about 'optimizing your taxes'.
  - grues-dinner 1y ago
    I would think so, but perhaps for the people who are self-defined by the magnitude of their wealth they become more and more obsessed by it as their expenditures on "real" things dwindles in comparison.
KaiserPro 1y ago
> without any concern over the cost of doing it? indeed thats why to have accountants and lawyers, the issue here is that non-dom meant that you could avoid paying tax on stuff you earnt outside of the UK. for example if you have a lot of income being generated in the USA, then being a non-dom meant that you could avoid paying tax here in the UK at the same time. For US citizens its a bit harder, as you're liable for tax on all income, regardless of source. I'm not sure how they get round that, debt financing or something similar I imagine
- SilverElfin 1y ago
  What’s the problem with that? Why should the UK or any country have a claim to money people are making elsewhere?
  - KaiserPro 1y ago
    I think its an issue of fairness. I, as a rich techbro, but not an Uber rich techbro, have to pay ~46% of my income in tax. (even though the majority comes from the US in USD) Don't get me wrong, I earn a fucking kings ransom, and I don't mind paying that amount of tax. but. If I was earning maybe 4x that amount, I could probably avoid a whole bunch of tax. It doesn't seem correct that the richer you get, the more optional tax is.
    - maccard 1y ago
      The thing is it’s not even 4x that amount, it’s more like 20x that amount.
      - KaiserPro 1y ago
        Having listened to my more senior colleagues, it wasn't that much more. If you own your own company, or have the ability to change your contract, its probably a lot less.
  - itsmek 1y ago
    Because physical presence incurs costs to taxpayer funded infrastructure? Why should I be able to dodge taxes by working remotely abroad? Are you saying independently wealthy people should be able to roam around and freeload without paying tax to their resident nation? In the US many people falsely believe illegal immigrants do exactly that, and that lie has contributed to a lot of outrage, so obviously people perceive the system you're proposing as unjust.
throwmeaway222 1y ago
I imagine the exodus was where the corporation is incorporated. And on paper someone with billions of dollars now has a mere 500k. Or whatever loophole their lawyers decided to figure out.
hermitcrab 1y ago
Yes, but if they have to pay a fair amount of tax they will only be able to afford a 40 metre yacht, rather than the 50 metre yachts that all their frenemies have and that just won't do.
roncesvalles 1y ago
That's exactly what I don't get. If you're a billionaire and your whole lifestyle goes topsy-turvy because of some new legislation, what's the point of being a billionaire? E.g. Lakshmi Mittal, one of the richest persons in the UK, was rumored to consider moving to the UAE because of the non-dom rule changes.[1] To me it's ridiculous that a person this rich feels such weak control over where they should live. And it's not like moving from the UK to the UAE is like moving from Switzerland to Austria. It's a humongous upset by most measures. [1] https://www.cityam.com/steel-billionaire-lakshmi-mittal-to-ditch-uk-after-non-dom-crackdown/ https://www.cityam.com/steel-billionaire-lakshmi-mittal-to-d...
anywhichway 1y ago
No, just the opposite. In general, the things wealthy people buy (luxuries) experience much larger swings in demand due to price changes like added taxes (in economic terms, "the elasticity of demand"). It's because they are only wants and not needs. They are also usually easily swapped. Instead of buying your wife those diamond earrings, you could get her a painting or a trip to Spain. And rich people are often very money savvy. It's the necessities that people will continue to buy (or at least replace with close substitutes), regardless of what happens to the price. Obviously, in this case it worked out much differently, but no, in general you can't say the wealthy people don't respond to price changes due to their wealth.

gadders 1y ago

Weren't there other restrictions as well? i.e could only stay 90 days at a time etc.

Nursie 1y ago
It is/was several years for “non-Dom” status people. That’s one of the reasons it was seen as such a scam. You’re living there like everyone else yet using this niche status to avoid paying tax.
Nursie 1y ago
To expand on my previous answer, the rules about non-dom were - https://www.bbc.com/news/business-32216346 https://www.bbc.com/news/business-32216346 "If you are a non-dom ... and you choose not to pay tax in the UK on your overseas earnings, you must pay: £30,000 if you've been here for at least seven of the previous nine tax years £60,000 for at least 12 of the previous 14 tax years" Which means that someone like the wife of previous Prime Minister Rishi Sunak could live in the UK, more or less indefinitely, and pay pretty much no income tax for seven years, then a very middle-class-salaried amount of tax where her earnings could actually be in the many millions. And as non-doms are tax resident in the UK, often they are also not taxed in the country where their money is earned. It's a great big tax dodge and the rest of the UK population was pretty sick of it.

graemep 1y ago

There may have been a gain to attracting super-rich people to live in the UK historically (this is an OLD rule) however people no longer necessarily invest where they live so the benefit is far more limited, and is offset by effects such as making property in London a lot more expensive for everyone else. In any case the super-rich are only taxed on income they take out of their businesses. That also limits the benefits of both attracting them, and of exempting them. I do not see any evidence that there was a net benefit from this exemption.

nobodyandproud 1y ago
> however people no longer necessarily invest where they live This is a problem. The UK is experiencing what the US is experiencing so I hope you don't mind. I'm all invested in the US. My citizenship, my family ties, my finances, and my language. Immigrating to a five-eyes nation would be far easier for me (racism aside). There's no going back for me and my family, unless I want to immigrate out and start from the very bottom with absolutely nothing. Because I'm a naturalized US citizen and I'm not white, I also harbor no illusions: There's every reason to believe that if this administration and its extremists continue down its trajectory, I and my family will eventually be subject to the worst. I'm also not wealthy: So it's in my best interest to be a moderating voice, fight for the values that define my home, be seen giving back/paying it forward, and push for the best outcome for my home. I'm not sure how to quantify the value add of this, and the wealthy transnationals who distinctly take without being a net positive--because they can so easily relocate--are a large part of the problem.
- graemep 1y ago
  I am not sure we are talking about the same thing. > The UK is experiencing what the US is experiencing so I hope you don't mind. Depends in what way? Economically, in some ways. Socially and politically not. > I'm all invested in the US. My citizenship, my family ties, my finances, and my language I assume you are saying that to agree with me, in that the super-rich are never invested in one country the same way. However, I meant invested literally, not metaphorically. Where you invest your money. > I'm not sure how to quantify the value add of this, and the wealthy transnationals who distinctly take without being a net positive--because they can so easily relocate Wealthy individuals can relocate. Businesses can relocate some things, but their actual operations are tied to physical assets and to where their employees live.

palmotea 1y ago

> The removal of this non-domiciled status is clearly far more significant than a normal tax increase. The UK was a uniquely attractive destination for the super-rich, because they could enjoy all the amenities of living in London with no real concerns about the tax implications. It is plausible that many of those people will decide to pay UK tax rather than move abroad, but we are talking about an exceptionally highly-mobile group who have already made the decision to move country, many primarily or solely for tax reasons. Boo hoo, let them move to some remote tax haven then, and live there next to their money and incorporation documents.

brainwad 1y ago
If that would have been the actual response, it wouldn't have made sense to proceed with the reform. The goal of treasury should be to maximise social welfare, not lose tax money just to dunk on the ultrarich.
- hermitcrab 1y ago
  But a lot of them are paying little or no tax anyway, due to trusts, shell companies and other financial engineering.
  - bluecalm 1y ago
    If they come and live in 10M house it's 300k/year right there if you tax properties/land (you can use progressive rate so it's higher on most valuable properties). Add consumption taxes and every rich Chinese/Arab kid is sponsoring welfare for few dozens people per year.
    - hermitcrab 1y ago
      The yearly council tax of a £10M house in central London is the same as a £320K house: https://www.westminster.gov.uk/council-tax/council-tax-bands-and-charges https://www.westminster.gov.uk/council-tax/council-tax-bands... So where did you get £300K/year from? Or are you saying that is what it should be?

sgt101 1y ago

But whatever happens the uk will not lose tax income from these people. Yes, they will not buy expensive property. Yes they will not buy designer goods... but if they leave will the impact on the average citizen be at all significant?

dh2022 1y ago
Exactly. These people did not come to create new companies, employ people, come up with new products. These people came to London to party, not to contribute. They will take their party with them, but not their contributions - because there are none.
- hermitcrab 1y ago
  And have less super wealthy people buying properties that they mostly don't live in will lower property costs for everyone else. The only people who will lose is the ecosystem of lawyers, accountants, estate agents and assorted remoras that service the super rich.

maccard 1y ago

Those people are already not paying tax in the UK though. The former PM’s wife has saved more in tax because of her status than everyone who works in my company combined will pay in income tax in their entire lives.

hermitcrab 1y ago
Indeed. The millionaires that are whining about paying their fair share of tax can ** off and not pay their taxes somewhere else. Good riddance.
- ghusto 1y ago
  Exactly this. All this talk of "oh but all the rich people will leave and investment will dry up" is really cover for "but my friends don't want to pay tax". We lose nothing (good) by them leaving, if indeed they would anyway.