Reading Time | 2 mins

Government to look at reform of non-dom tax

Share this article

The Treasury has published a consultation paper on reforming the tax system as it applies to non-domiciled residents.

The Government has also set out another consultation on its plans for a statutory residence test (SRT).

The aim of the non-dom consultation, the Government said, is to encourage individuals to invest in the UK while also ensuring a fair tax contribution.

The consultation provides details on the package of reforms that were announced at Budget 2011.

These include increasing the existing £30,000 annual charge to £50,000 for non-domiciles who claim the remittance basis in a tax year and who have been UK resident in 12 or more of the 14 years prior to the year of claim; allowing non-domiciles to bring overseas income and capital gains to the UK tax-free for the purpose of commercial investment in UK businesses; and simplifying the way in which some aspects of the current rules work.

The Government insisted that the current rules discourage non-domiciles from bringing their income or capital gains to the UK, creating barriers to potential investment in the UK economy. 

David Gauke, Secretary to the Treasury, said: “The Government wants to ensure that the rules of our tax system are fair. That is why we are increasing the tax charge for those non-domiciles who have been resident in the UK for long periods of time. 

“At the same time, it is important that skilled individuals and investors are encouraged to come to the UK from abroad and we recognise the fact that non-domiciles can make a valuable contribution to the UK economy. That is why we want to make it easier for them to invest in UK business.”

The Government is also consulting on rules it is considering for a statutory residence test.

At present, there is no full legal definition of tax residence, meaning that the rules are unclear, complicated and seen as subjective. 

To remove the uncertainty, the Treasury is proposing a framework for the SRT. There are to be four areas of consideration: accommodation; family residence; UK employment or self-employment; and a history of past residence.

Both consultations close on 9 September 2011, with a summary of responses due to be published in the autumn.

More details on the consultation on the reform of non-domiciled tax can be found at:

More details on the consultation on the SRT can be found at: