Super-Rich 'Will Simply Shrug off the New Fees' NON-DOMICILED
Byline: By Tom Scotney Business Staff
Plans announced in the report to raise funds by levying a fee on people who declare themselves non-domiciled in the UK will lead to the vast majority of small businesses coming back into the tax fold, according to experts.
But wealthy foreign businessmen like Chelsea owner Roman Abramovich and millionaire foreign premiership stars will just shrug off the fee, they added. The Chancellor, in a move that led critics to accuse him of copying the Conservatives, announced a flatrate charge of pounds 30,000 for UK residents registered as non-domiciled for tax purposes.
People who are nondomiciled or not a resident of the UK can currently use the "remittance" basis of taxation, meaning income and capital gains arising overseas are only taxed here when the wealth is brought in to the country.
But from April 2008, non-domiciled UK residents who have lived in the country for more than seven years will have to pay pounds 30,000 to have access to the remittance basis of taxation, or face UK tax on all their worldwide income and gains.
Stephanie Churchill, senior tax manager at Grant Thornton, said the majority of nondomiciled residents were small businessmen and private citizens registered for tax reasons, who would have no option but to withdraw their money and enter the UK tax system. She said: "Under George Osborne's suggestions, it was said that only 15,000 of the 115, 000 nondomiciled residents would benefit from staying non-domiciled.
"With the higher fees announced pounds 30,000 by the Treasury compared to pounds 25,000 suggested by Osborne there's obviously going to be even fewer for whom it's worth it.
"So it seems the vast majority would be better advised simply to give up their status and enter the UK tax system."
Ms Churchill added that the said the superrich were likely to just shrug off the pounds 30,000 payments to take advantage of the benefits of the still-generous remittance tax system.
But for the rest, she said the only solution was to go to an accountant to go over the complicated details of the new proposals.
"What's going to need to happen is a costbenefit analysis, and there's still a lot of detail we need to know," said Ms Churchill.
"We've already come up with about 20 questions about how it's going to work. …