Generally, those who have assumed the moniker of "non-doms" are resident in the UK in any given tax year and have the ability to only be taxed on their non-UK income and capital gains, to the extent it is brought (or remitted) to the UK.

Data from His Majesty’s Revenue and Customs (HMRC) tells us that 68,900 non-domiciled individuals paid tax in the UK in the 2021–2022 tax year, generating £8.48 billion in income tax, national insurance and capital gains tax. However, not all of these would be materially affected by the abolition of "non-dom" tax status.

To start with, 13,500 of these non-domiciled taxpayers were non-resident in the UK, paying relatively small amounts of UK tax on their UK income (an average of under £8,000 per year). They fall outside what we would normally call the classic "non-doms".

In addition, there were 15,700 individuals resident in the UK whose level of overseas income not remitted to the UK was less than £2,000. Unlikely then that these would be exposed to a significantly increased tax bill on the abolition of "non-dom" status.

Then there were a further 17,600 UK resident "non-doms", who are already taxed on worldwide income and capital gains on an arising basis, irrespective of whether they remit that income to the UK. These taxpayers have decided not to elect to use the remittance basis. On average, they pay £99,000 in income tax and national insurance and a further, relatively modest, £10,000 in capital gains tax.

That leaves us with 22,100 "non-doms" who are more likely to be exposed to the proposed changes. 

The bulk, some 19,700, used the remittance basis without charge. Their average tax bill was over £214,000. This is likely to have varied significantly across the group, making it difficult to determine exactly how many are likely to be meaningfully affected by the abolition of "non-dom" status.

That leaves 2,400 who have elected to pay the so-called "non-dom levy" to retain their ability to use the remittance basis of taxation. That levy varies between £30,000 per annum, for those resident in the UK for seven of the past nine years, and £50,000 per annum, for those who have been resident for twelve of the past fourteen years. Those who have chosen to do this are typically very wealthy; their average tax bill of £531,000 already including an average capital gains tax bill of £93,000. That indicates the abolition of the remittance basis will have a material impact on their personal finances, albeit they are low in number.

It is also worth noting that outside of these numbers, there were some 9,900 individuals who, by virtue of changes made in 2017, are deemed to be domiciled in the UK because they have resided here for 15 out of the last 20 years. As such, they are already liable to the full gamut of UK income tax, capital gains tax and inheritance tax on their worldwide income. Notably, their average income, national insurance and capital gains tax bill is a little over £400,000, though importantly their numbers have changed relatively little since 2018.

And so, in March 2024, the Office for Budget Responsibility (OBR) estimated that only 5,500 "non-doms" would be affected by the last government’s proposed tax changes. How that changes under a new government depends on how much further they tighten the tax net. But, as recent research from Oxford Economics points out, too much tightening risks eroding rather than growing tax revenues should it cause too many "non-doms" to relocate.

WHAT’S HAPPENED TO HIGH EARNING UK TAXPAYERS?

To put these numbers into context, it is also worth looking at what has happened to the number of high-income taxpayers in the UK. Data from HMRC suggests across the UK there were 395,000 taxpayers with an income of over £200,000, of which some 84,000 had an income exceeding £500,000.

And those earning over £500,000 have risen in number by 83% in ten years, off the back of a 44% increase since the 2020–21 tax year. Furthermore, their aggregate income of some £121 billion has more than doubled in the past ten years, providing a timely reminder of the extent of domestic wealth within the UK.

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