Should the government abolish the non-domicile rule which allows residents to limit the tax paid on earnings outside the UK?
The non-domicile rule was established by William Pitt the Younger in the late 18th century and allowed many of Britain’s richest permanent residents to avoid paying tax in the UK on their worldwide income. Non-domiciles pay UK income tax and capital gains tax on their UK sources of income and gains, and whatever income generated overseas they choose to remit to the UK. By contrast, UK domiciles have to pay tax on all of their income and gains, wherever in the world they are made – Britain or overseas. Proponents of overturning the rule argue that it has been wide open to abuse and offends the moral basis of taxation. Opponents argue that ending the rule will discourage foreign investment and that some non-doms pay as much as £132,000 per year in taxes.
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No. Residents should pay their exact taxes and shouldn’t be exempt from taxation outside of the UK. They should pay any taxes based on any income they get outside of the UK. A resident’s income in any other country they go to would be taxed, but taxes wouldn’t double up to be both that of the UK and foreign taxes. They’d only apply to the country of residency.
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