The new figures released by HMRC are not surprising given the tax legislation that has been introduced steadily over the last 10 or so years, which has been designed to attack the tax regime available to non-domiciliaries resident in the UK. That said, the "non-dom" regime is still a very effective planning tool for non-domiciliaries and HNW individuals should strongly consider taking advantage of the regime while they still can.

One part of this article in particular should be clarified:

HMRC said the number of non-doms had also fallen because some had chosen to change their status to be UK-domiciled after the government introduced an annual “non-dom levy” of between £30,000 and £60,000. The levy, as of April 2017, allows non-doms to continue to pay no tax on offshore income and capital gains, unless they bring the money to the UK. The levy raised just £315m last year.

It is correct that non-domiciled individuals who have been resident in the UK for over a certain amount of time must pay an annual charge in order to access the more-favourable remittance basis of taxation. This was the case before April 2017 and has continued to be the case in the period since.

One of the key changes in April 2017 was that non-domiciliaries can no longer reside in the UK indefinitely whilst continuing to shield their non-UK income and gains from UK tax. Once an individual has been UK resident for 15 out of the previous 20 tax years, they are automatically UK deemed domiciled and will be taxed on their worldwide income and gains as they arise.

It is not correct that this change means individuals are 'changing' their status to be UK-domiciled. It is true that non-domiciliaries can elect on a year-by-year basis whether to be charged on the remittance basis or the arising basis, the former of which is not available to UK domiciled individuals. It is also true that non-domiciliaries can elect to be treated as UK deemed domiciled for inheritance tax purposes. It may be that the author is conflating these concepts.

So the reason why HMRC's revenue from the remittance basis charge has fallen could be attributable to more factors than the article suggests:

  • More individuals may indeed be leaving the UK.
  • As remittance basis users can elect whether to be taxed on the remittance basis in any given year, non-domiciliaries may be getting wiser as to when to pay (or not to pay) the annual charge. The charge is only worth paying if the income and gains being shielded amount to more than the corresponding charge.
  • Since April 2017 there are many UK resident non-domiciliaries who now fall foul of the '15 out of 20' rule above. These individuals have all become UK deemed domiciled and the remittance basis of taxation is no longer been available to them. Before April 2017 these individuals could have happily continued to pay the remittance basis charge and so, necessarily, the revenue from the charge will have decreased.

If anything, therefore, the fact that there are HNW individuals who were previously non-domiciled and who have decided to stay in the UK shows that the UK continues to be a jurisdiction where wealthy individuals want to stay. It also shows that these HNW individuals are driven by many more concerns than simply their tax liabilities.