THE number of British residents applying for a tax break that can allow them to exclude much of their income from UK taxation has fallen since the beginning of the financial crisis, official data has shown.
Britain has become the location of choice for many of Europe’s super rich because of a tax break which allows them to be physically resident in the country but “non-domiciled” for tax purposes.
For a fee of £30,000 or £50,000 per year, depending on how long one has been resident in Britain, an individual with foreign ties can apply for “non-domiciled” status and be taxed only on money earned in the UK or brought into the country.
In practice, many super rich people enhance the benefit of this status by keeping even UK assets offshore, by ownership via foreign-registered vehicles.
The number of people availing of the tax break fell to 116,000 in the tax year to April 2011 from 140,000 in 2007-2008, a spokesman for the UK tax authority said.
Jason Collins, head of tax at law firm Pinsent Masons, said the figures showed the Government’s practice of charging for the right to avail of the tax break, introduced in 2008, and the introduction of a 50 per cent upper income tax rate in 2010, had made the UK a less attractive location for the rich.
However, the tax authority spokesman said the figures were also impacted by reduced employment in the financial sector and the economic downturn generally.
He noted the number of ‘non-doms’ was still up compared with the 1997/98 tax year, when 83,000 applied for the break.