To think it sets a really bad example for the country when the PMs family have tax dodged millions

[Chloefairydust]

Just that really…

Im really surprised Sunak actually made it to be prime minister considering the recent stories that have been in the news regarding his family avoiding millions of ££ in tax . I actually thought Boris would have been more likely to have been PM. (Not that he’s any better🤔)

AM isn't (legally) resident, but other non-UK citizens who are legally and practically resident in the UK do pay UK tax on overseas earnings - which was your question.

Just to clarify.

For Tax purposes AM is a UK resident, however she is also non domiciled.

In UK Tax Ordinarily Resident and Domicile are different. They are linked but you can be one and not the other.

Well Law abiding is compliance I suppose, but why are you trying to sneer at those who are law abiding?

Seems an odd stance to take up. Do you therefore approve of those who DO evade Tax because they are not being compliant? 🤔

So your argument is that rich people should pay tax they aren’t liable for just because you think they can afford it?
honestly that sounds like resentment on your part.

at what point do you suggest folk should pay more tax than they need to and why do you think expecting people to pay more tax than they need to is ethical @clarepetal ?

what ethical position means that you think you’re entitled to benefit from earnings earned elsewhere by people who are non-domiciled in the UK?

Excellent argument @Sunflowerkeep
you’ve really persuaded me with that well-reasoned response!

Well, they're Tories so...

I don't understand your point at all. Either you are a bit of a hypocrite or you have completely wild ideas of how the tax system works.

The meaning of "Tax breaks" include, tax allowances, tax deductions, tax statuses tax reliefs and tax credits etc
Non Dom Status is included in these.

There are hundreds, if not thousands of them

Some of them you get automatically, some you have to claim and some you declare and HMRC will check if you have correctly applied the legislation.

Are you honestly saying that anyone who has any of these tax breaks are selfish and shouldn't be benefiting from them?

If so, that 90% of the population.

None of these are "tax avoidance".

All of these tax breaks are open.
And they are deliberate.
They are available for anyone who qualifies for them.
If you qualify for Non Dom Status, then apply for it.

I don't know if you work or not.
Are you employed or self employed.
If so, you benefit from tax breaks.

In terms of PROMOTING them. As I say they are a fuck ton of them, it would would be a complete waste of money to have promotion campaigns on all of them, because not everyone meets the criteria for all of them.

▪︎If the tax break is applicable to a large portion of the population, such as ISA, then there they are promoted widely.

▪︎if the tax break is applicable to a selection of the population, such as salary sacrifice, then these are targeted promotions. Salary Sacrifice is only applicable for employees, so why would you waste money promoting to non-employees?
In the same vein, self employed people can claim tax deduction for buisness expenses, such as advertising costs. Employed people can't claim it, so it is of no value to them.
Again, there is a Research and Development Credit, unless you run a buisness that involves research and development, why would you want this promoted to everybody?

If you want to know about any Tax Breaks, just look at gov.uk, it's all there. None of it is hidden. And if it is applicable to yiu, you probably know about it already

You're right and I was wrong. Thanks for the correction.

The rules are here:

www.gov.uk/tax-foreign-income/non-domiciled-residents

Rightly or wrongly it looks reasonable to me, I'd love to see the specific change proposed.

www.gov.uk/tax-foreign-income/non-domiciled-residents

MN garbles the link. Last try.

www.gov.uk/tax-foreign-income/non-domiciled-residents

Yes you could make that argument but its an open and transparent decision - had certain journalists dug this up, we'd all be none the wiser.
plus it wouldn't normally involve 10s of millions in tax.

When a recent chancellor tried reducing tax rates for the very wealthy, we all heard the out cry!

At the end of the day, the Sunaks realised this wasn't a good look didn't they.

No worries. 😁

Most countries have rules for tax residency and Domicile.
But, off the back of this thread, I thought I'd do some research into why the UK has the Non Dom rules.
Turns out, it all stems from when we had the British Empire. That's how old it is!

Its been tinkered with over the years, but I can't find the curent proposed changes.

@BabyGrooverBug

For starters, every foreign national who has been in the UK for over 15 years.

OP, you need to consider the language “avoided”. We all avoid tax when we pay money into a pension or take an ISA. Tax avoidance is totally legal.

The issue is whether he (or his wife) evaded tax, which would be a criminal offence.

There is a grey area when people find crafty loopholes and use the law for a purpose for which is was not designed. Think Starbucks stripping profit out of high tax jurisdictions into lower ones.

But I don’t think that’s what his wife did. She just used the normal rules in the way they were intended.

So the question is a wider one.

Should the UK government allow very rich people (originally from abroad) but now living here to not pay tax on their overseas income.

You can bet the Tories won’t be changing this. Maybe start lobbying Labour to change it when they are next in power.

Re the non dom rules. For the first 15 years after moving to the UK, a uk tax resident (who is likely not a UK citizen) don’t have to pay UK tax on overseas income provided they pay a £30k tax charge.

Maybe it should be reduced to 5 years? Or 10? Maybe should be tied to citizenship (but it it was no one one apply).

Should the UK government allow very rich people (originally from abroad) but now living here to not pay tax on their overseas income.

You can bet the Tories won’t be changing this. Maybe start lobbying Labour to change it when they are next in power.

George Osbourne did tighten the rules but didn't do away with it. Neither has any Labour govt. Many countries have a form of the non dom status with the very purpose of attracting wealthy people, who tend to contribute financially by the very dint of the fact that they have a lot of money to spend. It's a difficult juggling act.

Would be interesting to see the amount of money invested in this country by non-dom individuals and the amount of tax they would have paid if not non-dom. one argument on having non-dom rules is to encourage wealthy foreigners to invest in this country. If we taxed them from the start would they move here?

What do you mean when you say ‘invest’? Spend money on consumption, shares, VC, start a company etc? You don’t need to live in a country to be able to do most of that. Attracting ‘talent’, maybe.

To me the morals of this look very different depending on whether taxes are paid in the original country, or a tax haven.

Does anyone know: because you are UK tax resident and agree to pay a flat fee for non-dom, does that mean that you can therefore NOT be tax resident in the country of domicile?

@Binkybix
Being UK tax resident doesn’t prevent you also being tax resident elsewhere like in your country of domicile (that depends on the laws of the other country as to what constitutes tax residence there). However double tax treaties tend to include a tie breaker to deem one of the countries your tax residence for the purposes of the treaty. This isn’t related to whether you pay the non dom charge but if you spend the majority of your time in the UK you’re probably going to be tax resident here.

But also you can be liable for tax in a country even if you’re not tax resident there. So let’s say you are Indian resident for tax purposes but have a UK branch of your business e.g you run a hotel in the UK.

You might not be UK tax resident but would likely be liable for UK tax on profits from the hotel (but not on the hotel business so far as it is outside the UK).

I’d assume that India has similar rules. So a UK tax resident running a business in India is still likely to be liable for Indian tax on profits of that business.

International tax quickly becomes really complex because you are looking at an interaction between the laws of each state plus the double tax treaties they have in place which allocate taxing rights between them.

Thanks @Chessie678

I've been through 16+ pages and I don't think anyone has really got to the main issue yet.

Akshata Murthy is quite plausibly non-domiciled, and non-doms are able to plan to keep their wealth outside of the UK for a fixed period of time. There's not really anything controversial about this - the argument is that non-doms will be paying tax overseas on what they don't bring into the UK.

However, and this is where it gets interesting...

If she's a non-dom, she's probably an Indian non-dom. Due to the tax treaty between the UK and India, she'll never pay inheritance tax on her assets in the UK. And as there's no inheritance tax in India, she's winning!

I'm loathe to use the word loophole, but that's the discrepancy that people should be cross no one is trying to legislate against. Off the top of my head, the only other people I can think of who get to preserve their tremendous wealth without being taxed anywhere are the monarchy. They choose to pay tax on their income, but they are keeping their right to not pay death taxes.

There's an argument that the Royal Family shouldn't pay death taxes as if they had to every time someone died, they might have to, say, sell off Balmoral, and a private owner might refuse access to the grounds to the public, which would be a shame. There's some logic that they should get to preserve their assets.

Not really sure what argument you can have against not legislating to make Indian non-doms pay tax in the UK once they've stayed here 15 years and therefore put down roots... What's the public interest in not bringing their estates within the tax net?

And to the people who brought up Meghan Markle, give your heads a wobble. Racism would be never challenging people based on the colour of their skin. Rishi Sunak is the PM; he's a public interest figure. The racist thing to do would be to give him a free pass - I'll treat him like any other politician, thank you.

As someone who isn't white, I roll my eyes every time someone invents a story of racism. Fair play to his spokeswoman for shooting down the current claims by going on the record to state Rishi Sunak doesn't believe the UK is a racist country either. Let the man be judged on his own actions and policies.

Oh, and why bring his wife into it? Well, if she dies, as her husband, he's probably going to benefit hugely from the lack of death estates. There's that conflict of interest.

Is the fact that there is no inheritance tax in India the reason she says she might move back to India?

There's no inheritance tax in India. If she lived in India, there wouldn't be an inequity between her and the people living in the same country, as they wouldn't be paying inheritance tax either.

The point is, she lives here, the bulk of people who also live here will pay inheritance tax, and the inequity is she won't pay inheritance tax here because it was originally negotiated Indian citizens would pay inheritance tax in India... but inheritance tax in India was scrapped ages ago.

I don't begrudge the assertion she might move back to India one day. If I were to move abroad and integrate there and live there for some time - it's likely I would still always want to be buried in the UK. I'd still always keep my UK passport. I'd still complain about the weather but shout at any non-Brit also doing the same.

Shaking your domicile status is actually pretty hard. As much as a lot of us are pissed off at many things about the UK right now, it's still 'home' in our hearts. You can't determine domicile based purely on facts - part of it is based on feelings.

The injustice is specifically around that tax treaty. As there is no concept of inheritance in the UK, Indians who have lost their non-domicile status should instead pay inheritance in the UK like the rest of us.

It's not great to ignore this when you're the Chancellor and personally benefiting from an estimated £200m tax saving... it's even worse when you're the PM. Just looks like a clear conflict.

I think given how divisive an issue this is, if he really wanted to reunite his Party and the country more generally, he'd try to legislate against it. You should be squeaky clean as the PM. (And yes, I know Boris Johnson made a horrible job of adhering to that, but trying to be better than him is a very low bar. Rishi Sunak should aim higher. It's a really tough gig, but he's not stupid, and he could potentially do well in this role if he listened to all the criticism and got above it by seeking to amend the laws that personally benefit him and not the person in the street.)

PS I should really clarify that Rishi Sunak would be likely to benefit from death taxes from the POV of his children not suffering tax on assets they inherit from their mother. Have just realised I didn't make that particularly obvious.

You could be right @feelthebeatfromthetangerine .

Inheritance Tax isn't an area I have specialist knowledge on.

But I will say this about Inheritance Tax: it is a tax that is quite easy to get out of.
You don't need to go through the rigmarole of getting Non Dom Status.