Reforms to the taxation of non-domiciles
LITRG has responded to a HMT consultation document on reforms to the taxation of non-domiciles. The consultation follows the announcements made at Summer Budget 2015 and sets out the detail of the proposals that will restrict certain individuals from being able to claim non-domiciled status for tax purposes.
The LITRG response concentrates on the issue of the £2,000 de minimis threshold, since HMT are questioning whether or not this should be retained. LITRG argues strongly not only for the retention of the £2,000 de minimis threshold, but also for its extension to those individuals who will become deemed-domiciled in the UK under the proposals. In addition, LITRG call for a review of the threshold, with a view to increasing it. LITRG also call for a review of the other existing exemption that aim to protect low income migrants, both to check that the proposals will not affect them adversely and with a view to increasing them.
The £2,000 de minimis threshold was a hard-fought concession obtained by LITRG to prevent many low income non-domiciled individuals finding themselves on the wrong side of the law. While LITRG put forward clear arguments for the retention of this threshold, HMT include no justification for the possible removal of the threshold.
LITRG points out that the failure to retain an appropriate de minimis threshold would result in a significant administrative and reporting burden for low-income individuals; it would also create more work for HMRC, for little or no additional tax revenue, due to the availability of double tax relief.
The consultation documents is available on the GOV.UK website.
The LITRG response can be found here.