Non-Doms: A Defence
“It means she pays no tax whatsoever.”
Overheard in a pub earlier in the year, the remark confirms the woman-in-the-street’s hazy knowledge about non-domiciled status. Such vagueness is understandable: less forgivable is the spite and sexism surrounding the leak which detailed the former financial arrangements of Akshata Murty (Mrs Rishi Sunak).
The Independent broke the story, aptly, on 6th April, the start of the current tax year. Following this disclosure of her entirely legal tax arrangements, Ms Murty bowed to pressure. Alas.
Non-Domiciled Taxation Status is a niche area of personal finance, only affecting 68,300 people in the tax year 2021, according to the latest figures from HMRC. The UK’s other 31.5million income taxpayers represent the almost 99.8 per cent of non-Non-Doms, i.e. the rest of us.
A sense of proportion is overdue.
Non-Doms are not tax dodgers. Far from paying no tax whatsoever, HMRC estimates that last year they paid almost £7.9 billion in UK income tax, capital gains tax and national insurance contributions.
Resident in the UK, but with a permanent home (domicile) abroad, Non-Doms however may not necessarily be taxed on any income or capital gains they make outside the UK. With these overseas earnings judged on a remittance or arising basis, it is little wonder that HMRC recommends getting professional tax help. And probably a cold flannel for the headache.
With the FIFA World Cup underway in Qatar, Premier League footballers provide a useful insight into Non-Dommery. Globally televised, top-flight football is probably the most tangible example of global Britain. For example, of the 14 Manchester United first-team players called up to represent their national teams, only three will be putting on the England shirt, notes Sporting News.
The teammates of Luke Shaw, Harry Maguire and Marcus Rashford could be on the pitch for Brazil, Portugal, Holland, Switzerland, Argentina, Denmark, France or Uruguay. Unarguably foreign nationals, but presumably resident in the UK, the 11 might be claiming Non-Dom status. If they are, they must pay tax on their vast UK earnings (“That much?? A week???”), but perhaps not on any extra they earn worldwide. Law in Sport cites the example of Sweden’s Zlatan Ibrahimović to explain the government’s 2017 changes to the Non-Dom rules, which, er, moved the goalposts concerning the length of UK residency and Remittance Basis Charges.
Young, marketable and with global exposure, Premier League footballers are living the dream. Sultans of bling, their fast cars, huge McMansions, sharp suits and massive watches all come at a price – on which they all pay VAT and stamp duty.
Non-Domiciled Taxation Status is back on the political agenda thanks to the Prime Minister – or rather to his opponents. They are taking every opportunity to imply that Non-Doms are immoral tax cheats and, by extension, to smear the Sunaks.
By suggesting that his wife’s wealth is his responsibility, the PM’s critics also reveal an unpalatable sexism. Next they will be demanding the repeal of the Married Women’s Property Acts (1870 and 1882), the Victorian-era legislation which for the first time allowed wives legal control of their money. Crinolines, anyone?
At Wednesday’s Prime Minister’s Questions, Keir Starmer drew on work by academics at the London School of Economics and the University of Warwick. Reforming the Non-Dom Regime claims that its abolition would raise more than £3.2 billion.
The academics’ earlier briefing paper, The UK’s “Non-Doms” challenges the stereotypical view of a Non-Dom – basically the undeserving idle rich – which “underplays the significance of those arriving from abroad to work, particularly in City jobs”. Among that cohort, they claim, is former Bank of England Governor, Mark Carney. Outside London, hubs of Non-Dommery are Aberdeen, thanks to oil industry workers, as well as Oxford and Cambridge, “highlighting the importance of international workers in British universities and the associated ‘spin-out’ commercial research organisations.”
Bristling with self-righteousness, at PMQs Starmer claimed the estimated £3.2 billion would pay for 15,000 doctors. Alternatively, it could just about cover the losses incurred by recently bankrupted local councils. They include Northampton (Conservative, c.£1 billion), Slough (Labour, £760 million borrowing debt, £474 million financial black hole) and Croydon (Unfathomable, three bankruptcies in two years, perhaps £1.6 billion).
As Labour obsess about the 0.2 per cent, the 99.8 per cent might be wondering why their hard-earned money is being squandered thanks to the financial mismanagement in Britain’s Town Halls. It adds another dimension to the newly-coined phrase “moron premium”.
At the time of a cost-of-living crisis, Labour seeks to stir up resentment against wealth creators. Delighted to be in the thick of a class war, opposition MPs from all parties seem to overlook that the rich include England Captain Harry Kane. He earns £200,000 a week at Spurs, in contrast to the average pay of £558. Wales’ Captain Gareth Bale was reportedly European football’s third highest earner, on £28.8 million a year at Real Madrid. Both are subject to MPs’ glutinous tributes, rather than their earnings being compared with nurses’.
The UK’s tax burden is at a record high, a sorry state of affairs for a Conservative government. The fiasco over finances in too many local councils is probably replicated in other areas of the public sector. With little being done to curb waste, taxpayers’ money is being shredded, Lycett-style, only for real.
After details of her finances were splashed over the media, Ms Murty announced that she would pay tax on her worldwide earnings. But, if possible, who doesn’t want – legally and legitimately – to save on their taxes with the help of the UK’s over-complicated tax regime?
Foundations, trusts and endowments can often be vehicles for “tax efficiency” as accountants like to call it. For example, Tax Justice UK, demanding the abolition of Non-Dom status, is bankrolled by a number of Trusts. Do any of them take advantage of the tax exemptions available to charities?
Less red rose than emerald green with the politics of envy, the Prime Minister’s opponents are playing the man not the ball by weaponising his wife’s wealth against him.
It’s an ugly game.