Non-domiciles

By THIS IS MONEY
Updated:

 

We examine the tax loophole that makes the UK so popular with Russian oligarchs, Indian steel barons and Greek shipping magnates.

What is it?

If you were born abroad, or have foreign parents, you could slither through one of Britain's most generous tax loopholes.

Non-domiciled status allows wealthy people to avoid paying UK tax on overseas income, even if they live here. All they have to do is establish their foreign origins and say they eventually plan to leave the country.

It is particularly appealing to Russian oligarchs, Indian steel barons and Greek shipping magnates who enjoy life in London but prefer to make as modest a contribution to the UK Exchequer as possible.

Sounds great

It is if you are a member of the privileged few. Defenders point out that any income non-domiciled princelings earn inside Britain is taxed in the normal way, though there are ways of minimising this as well.

As Patrick Stevens, tax partner at Ernst & Young, says: 'All of these people bring huge amounts of economic activity and wealth to the UK.' On the other hand, to ordinary mortals it looks a tad unfair, he concedes.

How common is it?

Increasingly. Recent government figures suggest there are well over 100,000 non-domiciled people in Britain, as the ultrawealthy flock here to take advantage of a tax break with no parallel in other major economies.

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