Jeremy Hunt is reportedly considering axing the controversial "non-domiciled" tax status to help fund pre-election tax cuts, but what is it?

Non-dom tax status is for wealthy overseas individuals and has been highly controversial. 

In April 2023, 68,800 non-doms were living in the UK, with an estimated 37,000 claiming the special ‘remittance basis’ tax status.

What is non-dom status?

A “non-domiciled individual” is a person who lives in the UK but is not settled here permanently. They will only pay UK tax on money made in the country, and can avoid paying it on their foreign income if they opt to claim the “remittance basis”.

This allows wealthy individuals living in the UK to elect the lower-tax country as their domicile, making for major savings.

There are two ways you can claim this status:

  • Firstly, if you weren’t born in the UK, or your father came from a different country.
  • The only other way is if you are over 16 and choose to leave the UK to live elsewhere permanently.

Research from the London School of Economics found that scrapping the special exception would raise the government over £3.2bn a year, something that could help fund other tax cuts. Their forecast predicts that just 0.3 per cent of people with non-dom status would leave the country in this scenario.

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However, the Institute for Fiscal Studies this week warned the chancellor to “tread carefully” on removing it.

The research group pointed out that around 37,000 people are claiming the non-dom tax exception in the UK, still paying a collective £6bn in UK taxes. Any major change, they argue, could see many of them leave the country – taking this revenue with them.

How much do non-doms pay

  • £30,000, if you’ve been in the UK for at least seven of the past nine tax years
  • £60,000 if you’ve been here for at least 12 of the past 14 tax years

You can no longer claim non-dom status after you have lived in the UK for 15 of the previous 20 years.

Non-doms that don’t claim the remittance basis will simply pay UK tax on their foreign income (over £2,000).

Several other countries similarly operate a tax system with special rights for non-dom individuals.

Mr Hunt has not always been in favour of axing the status, however, saying back in 2022: “I would rather wealthy foreigners spent their money in Britain.