The UK shadow Chancellor claims that labour will raise £2.6billion over the course of the next parliament to close what they call ‘loopholes’ in the governments plans to abolish exemptions for people who are not domiciled (non-doms) in the UK for tax purposes.
Labour’s Rachel Reeves has responded to questioning about how the opposition will boost NHS funding and introduce breakfast clubs to all primary schools.
As a way to facilitate these promises, Reeves claims Labour will crackdown on tax avoidance, and hope to plug the gaps in current UK law for non-doms.
Basil Dixon, partner at Payne Hicks said the ‘uncertainty’ for non-doms will be disappointing, and say that ‘the vast majority of individuals who are taxed under the current regime for non-domiciliaries simply want to follow the law and to be able to plan properly and appropriately’. He has accused Labour of taking a ‘political pot shots’ that are ‘helpful to no one’.
The policies were initially designed to be paid for by ending non-dom tax status for wealthy non UK citizens living in the country – but Chancellor Jeremy Hunt announced in the Spring Budget that he planned to do the same thing. This has forced the shadow secretary’s hand, announcing a new funding mechanism that will boost HMRC’s enforcement with £55million of funding.
Labour proposes that the tougher measures on non-doms will allow a new labour government to rake in over £5bn a year and give the Treasury breathing room to hit fiscal targets.
However, the Conservatives said they want to reduce the “tax gap” and said Labour would eventually need to “raise taxes on working families” to counteract expenditure.
Dixon, said:
“It is perhaps no surprise to see the Labour Party start to pick holes in the non-dom plans announced at the Spring Budget but recent comments create a level of uncertainty that many will find disappointing. In contrast to the pejorative language used by the Shadow Chancellor, the vast majority of individuals who are taxed under the current regime for non-domiciliaries simply want to follow the law and to be able to plan properly and appropriately. Imprecise statements and political pot shots are helpful to no one and for a party that claims to be a Government in waiting it would not be unreasonable to expect sensible comment and detailed explanation of likely tax policy.
“As things stand, it is difficult to draw any conclusion other than that a Labour Government would look to tighten any new non-dom regime (possibly significantly) – the inheritance tax treatment of offshore trusts settled before April 2025 and the one-year 50% income tax discount on offer for some individuals seem to be the subject of particular attention – and this is another factor that taxpayers are going to have to factor into their considerations as they look to plan in an environment of great political and fiscal uncertainty.”
