Labour’s plans to axe ‘non dom’ status for the wealthy described as ‘shambles’

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The Tories said a Labour pledge to abolish controversial “non dom” tax status was “unravelling” after it emerged Ed Balls recently indicated that such a move could cost the country money.

Labour leader Ed Miliband used a speech to declare that the 200-year-old rule, which applies to around 116,000 people, makes Britain an “offshore tax haven for a few” and can “no longer be justified”.

The move against wealthy tycoons who use the rule to avoid paying UK tax on overseas earnings and capital gain is another striking salvo in Labour’s campaign to paint Conservatives as the friends of the rich.

But Chancellor George Osborne dismissed the announcement as a “complete shambles”. In a January interview shadow chancellor Mr Balls said: “I think if you abolished the whole status then probably it ends up costing Britain money because there will be some people who will then leave the country.”

Asked by BBC Radio Leeds at the time if he would scrap the status, he said he was looking at tightening the system to “make sure the non-dom rules work in a fair way”.

Mr Osborne said that the Government’s policy of increasing the fees charged to non-doms, which he raised as recently as December, had brought in more than £1 billion.

He said: “Either they are going to abolish non-dom status altogether which would cost our country hundreds of millions of pounds in lost tax revenues and lost investment - the reason they did nothing on this during 13 years in office. Or they are just tinkering around the edges and making small adjustments to the rules on how long people can be non-dom.”