Wealthy Indians who have made the UK their long-term home will no longer be able to avoid British taxes on their overseas assets, according to new rules being brought in by the Conservative government.
Unveiling the first Conservative-only Budget in nine years on Wednesday, British Chancellor George Osborne, announced that from 2017 onwards individuals resident in the UK will no longer be able to claim non-dom status if they had lived in the UK for 15 of the past 20 years, and would be considered “UK domiciled” for tax purposes.
Under the current system those who are resident in the UK but who claim “non dom” status are able to avoid tax on offshore income not remitted to the UK for seven years, after which time they have to pay an annual fee of up to 90,000 pounds to maintain that privilege. There are also benefits when it comes to inheritance tax. “It is not fair that people live in this country for very long periods of their lives, benefit from our public services, and yet operate under different tax rules from everyone else,” said Osborne on Wednesday.
Ahead of the May general election in the UK, the opposition Labour Party had proposed doing away with non-dom status altogether. While welcoming the development, campaigners argued the Conservative plans did not go far enough.
“Rather than keep the non-Dom rule for 15 years, why not just abolish it?” tweeted Richard Murphy of the Tax Justice Network. The summer budget had few surprises, and included details of some 17 billion pounds of fiscal consolidation – including 12 billion pounds in welfare cuts and 5 billion pounds related to changes in taxation, and a clamp down on tax evasion and avoidance.
The government also announced a steady increment in the minimum “living” wage to 9 pounds an hour by 2020 from 6.50 pounds an hour at the moment. It will cut corporation tax to 18 percent in 2020, from 20 percent.