Non dom rules are 'politically expedient' to abolish amid UK Government review

Widespread speculation that non-dom tax breaks are under active review by the UK's Treasury department was picked up in a LinkedIn post by leading tax and trusts lawyer James Quarmby, head of Stephenson Harwood's private wealth team.

He commented: "I predicted a week ago, the conservative government is now reviewing the non dom rules. Our PM is embarrassed by his wife's and his former non dom status and it would be politically expedient to abolish it.  

"Talk of increased tax take on abolition is pure fantasy and not backed up by any evidence.  To the contrary - non doms bring in c.£6b of personal taxes alone, ignoring business taxes."

He was referring to a report in The Guardian which said non-dom tax breaks were being reviewed by the Treasury in effort to raise revenue.

No final decisions have been taken but Whitehall sources said options were being examined by the Treasury's high net worth individuals policy team, the national newspaper said. 

Changes could include reducing the time period over which high net worth individuals can avoid tax on their worldwide income. Experts suggest that cutting the duration from 15 to five years could raise an additional £1.6bn a year.

Any move on non-doms would be a politically risky one for Sunak, whose wife, Akshata Murty, is a non-dom. In April, Murty agreed to pay tax on all worldwide income in future, though not backdated.

Murty previously paid £30,000 a year for the status, which means she does not pay UK tax on her overseas income. Under the current rules, the status would have automatically ceased once she has resided in Britain for 15 years.

The change has long been feared by the UK's main opposition party Labour, which has said it would abolish the loophole entirely, using any extra income from this to fund some of its own proposed spending commitments.

The shadow chancellor, Rachel Reeves, has said scrapping the tax break in full would raise £3.2bn a year and Labour would use these funds to pay for an expansion of the NHS workforce. However, the party would also need a proposal for a new regime for temporary residents, which could be between six months to five years.