The UK's tax regime for non-domiciled residents (non-doms) is under scrutiny and facing potential overhaul. For years, this system has allowed individuals who live in the UK but are not domiciled there for tax purposes to enjoy significant tax advantages. However, this may change with the Labour Party's proposal to abolish the non-dom status if they come to power.
The Labour Party's stance is driven by a desire for fairness and the need to generate additional revenue. They plan to redirect the funds raised from abolishing non-dom status towards public services like the NHS and school breakfast clubs. This policy could potentially bring in an additional £3.2 billion per year, although some tax professionals estimate the figure to be closer to £1 billion.
The prospect of these changes is causing concern among the UK’s wealthy non-dom residents. With the Labour Party leading in polls, many are exploring options to relocate to countries with more favorable tax regimes. Jersey, in particular, stands out as an attractive alternative with its High-Value Residency program, offering significant tax benefits and a welcoming environment for high net worth individuals.
This scenario is not unique to the UK. Other countries, such as Portugal and Italy, have also been adjusting their tax policies to attract wealthy foreigners. However, the Portuguese government recently announced plans to end its non-habitual resident regime, a decision that could redirect wealthy individuals to other destinations like Italy or Jersey.
The debate over non-dom status in the UK reflects broader trends in global tax policy and wealth management. The potential changes raise questions about the mobility of the wealthy in response to tax policy shifts and the impact on national economies. The future of the non-dom regime in the UK and similar systems elsewhere will be closely watched by tax professionals, wealthy individuals, and governments around the world.