Budget 2024: 'Non-Dom' Status Demolished

Jeremy Hunt steals a previous Labour Pledge to abolish non-domiciled tax status, which shields wealthy individuals from tax on their foreign earnings 

Christopher Johnson 6 March, 2024 | 2:28PM
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Jeremy Hunt UK Main

Jeremy Hunt has scrapped the controversial "non-dom" tax status in this year's Budget, parking the government's political tanks on the Labour Party's lawn and unleashing the next wave of debate over how the UK's wealthiest individuals should be treated. 

The status, which permitted individuals living in the UK to avoid tax on their earnings abroad, will now come to an end next year in favour of a "fairer" and "more competitive" option, Hunt told MPs.

Though the headline policy will come into effect in April 2025, in practice it will only take effect once previously-eligible individuals have lived in the UK for four years. This is, practically speaking, a huge grace period.

Non-dom tax status has been a political battleground for years, and the cause of some discomfort for parties who have taken a stance on it. 

At the 2015 election, the Labour Party committed to abolishing it under its then-leader Ed Miliband, but found itself publicly embarrassed when its then-shadow chancellor Ed Balls was shown earlier footage in which he argued the policy wouldn't bring in higher tax receipts.

Prime Minister Exposed on Non-Dom Tax Status

Rishi Sunak has also faced heat on this issue after his wife, Akshata Murty, was revealed to have been a "non-dom" in 2022. Murty, who received over £11.5 million in dividends from her stake in her family's Indian IT services company Infosys, was shielded from tax on these earnings.

Today, Treasury documents published alongside the Budget argue that the policy will generate £185 million in the tax year 2025/26, before annual revenue rises to £2.8 billion in 2026/27, £3.6 billion in 2027/28, and £2.7 billion in 2028/29.

However, some commentators have suggested the policy will ultimately drive wealthy individuals from UK shores. 

This is in line with the opinion of  the Institute for Fiscal Studies, which has warned the chancellor that removing the status could see many of the 37,000 people claiming it exit the country.

The Labour Party has previously said that Conservative adoption of the measure would amount to "abject humiliation" for the government.

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Christopher Johnson  is data journalist at Morningstar

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