Latest news with #HMRevenue&Customs
Reuters
10 hours ago
- Business
- Reuters
Breakingviews - Britain's non-dom melodrama has uncertain finale
LONDON, July 23 (Reuters Breakingviews) - Britain is haemorrhaging rich taxpayers, and it is all Rachel Reeves' fault. That's the received wisdom about the finance minister's decision to kill off so-called non-domiciled status, which allowed non-Brits to live in the United Kingdom without paying tax on their overseas income and capital gains. Yet the fiscal upshot of any expat exodus is hard to nail down. So-called non-dom status originated in the 18th century to shield citizens working in the British Empire from taxes back at home. Its modern iteration, which allowed those born overseas to only pay tax on what they earned in the UK or brought into the country, was increasingly hard to defend. After 2008, the government made those holding non-dom status for more than seven years pay a hefty annual charge, while ministers later capped the perk at 15 years from 2017. Prior to losing an election last year, Reeves' Conservative predecessor Jeremy Hunt scrapped the category. So when Reeves confirmed, opens new tab non-dom status was no more last October, it was hardly a surprise. Even so, her reforms had several important nuances. Recent arrivals who have been in Britain for less than four years are still able to swerve taxes on overseas earnings. Until 2028, they can also bring accumulated wealth onshore at a discounted tax rate that starts at 12% and rises to 15%, well below the typical 40%-plus charge. But former non-doms who stayed beyond April 2025 are on the hook for UK inheritance tax on their worldwide assets, also charged at 40%. This can apply for a decade, even if they subsequently move elsewhere and die there. This last provision caused deep consternation among Britain's wealthiest expats. High-profile non-doms like Egyptian billionaire Nassef Sawiris, opens new tab are upping sticks, while an Oxford Economics survey, opens new tab last year predicted over 60% of the group would follow within two years. On paper, this looks like a fiscal own goal for the UK. A cohort of wealthy but highly mobile people who previously paid some UK tax will take their contributions elsewhere. Some have decamped to Italy, which lets new arrivals shelter overseas income for a flat fee of 200,000 euros a year. Yet the reality is more complicated. The consequences for Britain's fiscal position depend on how much UK tax non-doms previously paid; how many quit the country; and how much overseas wealth and income they take with them. The last two figures are hidden inside a black box. Reeves knows how much the non-doms previously contributed to the exchequer. New figures, opens new tab for the tax year ending April 2023 – the last for which there is detailed HM Revenue & Customs (HMRC) disclosure – show people claiming the status paid 7 billion pounds in tax on UK earnings and capital gains. That's how much is at risk if they all decamp. Yet such a universal exodus is implausible. And those who stay will in future pay tax on their worldwide earnings, just like ordinary Brits. Estimating that contribution requires guesswork, because non-doms did not previously have to disclose their offshore wealth. Arun Advani of the University of Warwick hypothesises, opens new tab that the average non-dom's overseas income is similar to the figure rich Britons disclose to the taxman. If he's right, the average non-dom had offshore earnings and gains of 440,000 pounds in 2018. That figure has probably swelled due to inflation and rising asset values. The problem is that there is no such thing as an average non-dom. Of the 42,300 people who used the status to shield offshore wealth, some 17,700 told HMRC that their overseas income and gains were less than 2,000 pounds a year, making them largely irrelevant to the exchequer. Of the remaining 24,600, some are still exempt from offshore tax because they have been in the country for less than four years. HMRC data shows that only 2,600 people paid a fee of 30,000 pounds a year or more to preserve their special status. This group may well have the largest hoard of offshore wealth. It also paid a big chunk of UK tax, accounting for 1.3 billion pounds of the 7-billion-pound domestic non-dom contribution, HMRC data shows. The tax consequences for Reeves, then, boil down to two numbers. How much does the UK tax paid by former non-doms shrink as some of them leave? And does the additional tax on foreign earnings paid by those who remain make up the shortfall? Answering that question involves lots of assumptions. The Centre for Economics and Business Research (CEBR), for example, estimates, opens new tab that the UK government will be worse off if more than a quarter of non-doms leave. By contrast the Office for Budget Responsibility, which monitors UK fiscal matters and has access to foreign governments' data on British taxpayers, reckons, opens new tab Reeves will on average pocket an additional 3.5 billion pounds a year between 2026 and 2030 from taxing former non-doms' overseas earnings and gains. The OBR does not disclose what happens to the domestic tax take, and stresses its figures are 'highly uncertain'. However, it assumes just 12% of non-doms will flee, implying a significant net gain for government coffers. Measuring the scale of the exodus is further complicated by the fact that this cohort is already highly mobile. Last year, for example, 8,900 non-doms left, opens new tab Britain while 12,900 new ones arrived. It's also true that the decisions of a small number of very wealthy people could swing the results one way or another. For Reeves, who expects the new regime and the temporary discount for bringing wealth onshore to raise 34 billion pounds by 2030, any shortfall is bad news, especially now that Labour's botched welfare reforms have left her with big fiscal holes. The Financial Times reported last month that she might limit the damage by tweaking the inheritance tax provisions, which the OBR projects will raise only 500 million pounds over the four years to 2030. Even so, any comprehensive assessment of Reeves' decision will have to wait until January 2027, when tax returns for the year ending April 2026 are due. Before then, any accusation that she has made a major fiscal faux pas is pure guesswork. Follow George Hay on Bluesky, opens new tab and LinkedIn, opens new tab.
Daily Mirror
3 days ago
- Business
- Daily Mirror
HMRC issues warning to anyone aged 16 or over
The government department has urged people to stop HM Revenue & Customs (HMRC) has issued a warning to anyone aged 16 or over. Urging people to stop "oversharing" online, the official UK government department said that this could put you at risk. Taking to X, formerly Twitter, they warn: "Oversharing isn't caring – only share your National Insurance number when you really need to. Keep it safe in the HMRC app." UK residents typically receive their National Insurance number automatically, just before turning 16. If you aren't aware of yours, it may be that you already have it without realising it. For example, you may have come across a letter with a number that looks like "QQ123456B", HMRC note. Your National Insurance number ensures that your contributions and taxes are properly recorded under your name. It is unique to you and will never change. The number is made up of 2 letters, 6 digits, and a final letter. What happens if I share my National Insurance number? HMRC warns that in order "to prevent identity fraud, do not share your National Insurance number with anyone who does not need it." Who needs my National Insurance number? These organisations may need to know what your number is: HM Revenue and Customs (HMRC) your employer the Department for Work and Pensions (which includes Jobcentre Plus and the Pension, Disability and Carers Service), if you claim state benefits, or in Northern Ireland the Department for Social Development your local council, if you claim Housing Benefit, or the Northern Ireland Housing Executive Electoral Registration Officers (to check your identity when you register to vote) the Student Loans Company, if you apply for a student loan your pension provider if you have a personal or stakeholder pension your Individual Savings Account (ISA) provider, if you open an ISA authorised financial service providers who help you buy and sell investments like shares, bonds and derivatives - you can check if your provider is authorised Veterans UK How to download the HMRC app Typically, you'll receive a letter confirming your National Insurance number just before your 16th birthday. To stay on top of this and other details, you can download the HMRC app here. But what exactly does the app offer, and is it worth installing? The HMRC app is a simple and fast way to get information about your tax, National Insurance and benefits. You can use it to check your: tax code National Insurance number income and benefits employment and income history from the previous 5 years Unique Taxpayer Reference (UTR) for Self Assessment Self Assessment tax and how much you owe Child Benefit State Pension forecast gaps in National Insurance contributions You can also use it to: get an estimate of the tax you need to pay make a Self Assessment payment make a Simple Assessment payment set a reminder to make a Self Assessment payment access your Help to Save account use our tax calculator to work out your take home pay after Income Tax and National Insurance deductions track forms and letters you have sent to us claim a refund if you have paid too much tax ask HMRC's digital assistant for help and information update your name update your address save your National Insurance number to your digital wallet check for gaps in your National Insurance contributions and the benefits of paying them check if you can make a payment for gaps in your National Insurance contributions choose to be contacted by HMRC electronically, instead of by letter How do I use the HMRC app? Once you've downloaded the app, simply enter your Government Gateway user ID and password to log in for the first time. If you don't have a user ID, you can easily create one through the app. After that, you'll be able to access the app in the future using: a 6-digit PIN your fingerprint facial recognition
Rhyl Journal
6 days ago
- Business
- Rhyl Journal
Fewer people claimed non-dom tax status in UK ahead of Government crackdown
There were about 73,700 people claiming non-domiciled tax status in the year ending in April last year, according to estimates from HM Revenue & Customs (HMRC). This was 400 fewer than the 2022-23 tax year, or a dip of about 0.5%. The number of non-doms, according to self-assessment tax returns, stood 3,900 below that in the tax year ending 2020. It indicates a slowdown in the number of people claiming the tax status following a post-pandemic resurgence. Non-domiciled means UK residents whose permanent home, or their 'domicile' for tax purposes, is outside the UK. The regime meant that so-called non-doms paid tax in the UK only on income generated in the UK – meaning any income earned overseas was exempt from British taxation. However, the Labour Government abolished the non-dom tax status in April following backlash that wealthy residents could enjoy the benefits of living in the UK without paying as much tax. Previous chancellor Jeremy Hunt estimated that scrapping the regime would raise about £2.7 billion for the Treasury by 2028-29. Recent data showed the UK saw the biggest fall in billionaires on record amid the Government non-dom clampdown. The Sunday Times Rich List said there were fewer of the world's 'super rich' coming to live in Britain. HMRC's data published on Thursday showed that some £9 billion was raised from non-doms paying income tax, capital gains tax and national insurance last year. This was a £107 million increase on the prior year, despite the dip in the number of individuals.
South Wales Guardian
6 days ago
- Business
- South Wales Guardian
Fewer people claimed non-dom tax status in UK ahead of Government crackdown
There were about 73,700 people claiming non-domiciled tax status in the year ending in April last year, according to estimates from HM Revenue & Customs (HMRC). This was 400 fewer than the 2022-23 tax year, or a dip of about 0.5%. The number of non-doms, according to self-assessment tax returns, stood 3,900 below that in the tax year ending 2020. It indicates a slowdown in the number of people claiming the tax status following a post-pandemic resurgence. Non-domiciled means UK residents whose permanent home, or their 'domicile' for tax purposes, is outside the UK. The regime meant that so-called non-doms paid tax in the UK only on income generated in the UK – meaning any income earned overseas was exempt from British taxation. However, the Labour Government abolished the non-dom tax status in April following backlash that wealthy residents could enjoy the benefits of living in the UK without paying as much tax. Previous chancellor Jeremy Hunt estimated that scrapping the regime would raise about £2.7 billion for the Treasury by 2028-29. Recent data showed the UK saw the biggest fall in billionaires on record amid the Government non-dom clampdown. The Sunday Times Rich List said there were fewer of the world's 'super rich' coming to live in Britain. HMRC's data published on Thursday showed that some £9 billion was raised from non-doms paying income tax, capital gains tax and national insurance last year. This was a £107 million increase on the prior year, despite the dip in the number of individuals.
Powys County Times
6 days ago
- Business
- Powys County Times
Fewer people claimed non-dom tax status in UK ahead of Government crackdown
The number of non-dom taxpayers in the UK dipped last year prior to the Government clamping down on the tax status, official figures show. There were about 73,700 people claiming non-domiciled tax status in the year ending in April last year, according to estimates from HM Revenue & Customs (HMRC). This was 400 fewer than the 2022-23 tax year, or a dip of about 0.5%. The number of non-doms, according to self-assessment tax returns, stood 3,900 below that in the tax year ending 2020. It indicates a slowdown in the number of people claiming the tax status following a post-pandemic resurgence. Non-domiciled means UK residents whose permanent home, or their 'domicile' for tax purposes, is outside the UK. The regime meant that so-called non-doms paid tax in the UK only on income generated in the UK – meaning any income earned overseas was exempt from British taxation. However, the Labour Government abolished the non-dom tax status in April following backlash that wealthy residents could enjoy the benefits of living in the UK without paying as much tax. Previous chancellor Jeremy Hunt estimated that scrapping the regime would raise about £2.7 billion for the Treasury by 2028-29. Recent data showed the UK saw the biggest fall in billionaires on record amid the Government non-dom clampdown. The Sunday Times Rich List said there were fewer of the world's 'super rich' coming to live in Britain. HMRC's data published on Thursday showed that some £9 billion was raised from non-doms paying income tax, capital gains tax and national insurance last year. This was a £107 million increase on the prior year, despite the dip in the number of individuals.
