In the current debate in the UK over the non-domicile tax status of Chancellor Rishi Sunak's wife Akshata Murty, it does, on the face of it, seem grossly unfair that the wealthiest foreign residents of the UK should pay little or no income tax, says Howard Bilton, chairman and founder of The Sovereign Group. 

However, non-doms contribute massive amounts of revenue to the UK exchequer in many different ways and the likelihood is that, without them, the tax burden on normal UK residents would have to increase.

The government estimates that non-doms contribute £7.9bn to the exchequer in taxes on their UK earnings but this probably does not take into account the additional benefits to the economy in respect of their employment of other people (who pay tax), their payments of fees to professionals in the UK (who pay tax), their payment of VAT on the large amounts they spend in the UK, and so on.

We can be relatively certain that most of these people would not be in the UK contributing anything, were it not for the non-dom tax status that allows them to limit their exposure to UK tax and, in particular, to UK inheritance tax (IHT) - which is charged at 40% of their worldwide capital wealth. 

Would they leave if non-dom status was removed? Probably. A large number of our clients left the UK when the benefits of non-dom status were narrowed by making non-doms liable to UK IHT after they had been in the UK for 15 years.

Of those that have stayed, we are fairly certain from the conversations we have had that many more would go if non-dom status was removed altogether.

Of course, new wealthy residents are also continuing to come to the UK.  It seems certain they would not arrive if the tax break didn't exist.  

For evidence of that see how well Portugal, Greece and Italy have done in attracting high net worth individuals by introducing their own special tax status for new immigrants.  These countries consider their own tax advantaged schemes to be a great success. 

Admittedly, the London's non-doms cannot move to New York or Paris and enjoy a similar non-dom status, but they could enjoy substantial tax breaks if they moved to Lisbon, Monaco, Athens, Rome, Dublin, Jersey, Guernsey, the Isle of Man, Singapore, Hong Kong, most places in the Caribbean or the many other countries that would welcome them. And many would do just that if the UK increases their taxes.

Rich foreigners do indeed push up the prices of housing. They have definitely done that in London to an extent that some locals have been priced out of the market. 

But it should not be forgotten that a very large number of people who hold, or have held, London property have benefitted hugely from these rises. And the UK exchequer has benefitted hugely from the huge sums paid in stamp duties and other fees.

Rich foreigners also tend to be rather generous when it comes to charitable donations in the UK and those contributions would likely cease if they left. No figures are available, but this benefit should not be underestimated.  

A country's ability to attract high net worth individuals is not just a function of its tax system. 

It is a package that includes housing and infrastructure, rule of law, high quality professional services, healthcare and education, cultural and leisure attractions, communications - airports from which you can get to lots of places easily, and state of the art internet and telephony - and often (although perhaps not in the case of the UK) a good climate. 

Removing the tax incentive may not make a huge difference - but experience suggests otherwise.

Readers might be interested to note that the overall tax burden on earned income in the UK is probably above 80% if all taxes are considered. Income tax is just one element. On top of the top tax rate of 45%, you must add national insurance, council tax, congestion charges, road tax, fuel taxes, tobacco and alcohol taxes, and then VAT.

And then after all the taxes that have been paid throughout life, a further 40% is taken by government in IHT on anything remaining when it is passed on. 

Is that a fair tax burden? Many people think not and that is part of the reason why five million Brits choose to live abroad in lower tax countries so they can accumulate wealth, which would be impossible if they stayed at home.

And is it fair to attract wealthy individuals to the UK based on a tax deal that is then removed once they are embedded?

Some commentators claim that UK resident non-doms rely on a "loophole" to avoid UK tax on their worldwide income. We do not agree with this. Non-doms can elect to be taxed on the remittance basis (they are known as ‘remittance basis users'), for which there is a highly detailed and prescriptive tax regime. They are not exploiting an unintended gap in the law.  

Although the remittance basis allows non-doms not to pay tax on their worldwide income and gains that are not brought into the UK, this comes with some negative tax consequences. 

First, they lose their income tax 0% personal allowance and their 0% annual exemption for capital gains tax. 

Second, any dividends that are remitted to the UK are taxed at the standard marginal rates of income tax (40% or 45%) rather than the lower dividend rates. 

Third, a non-dom who has been UK resident for more than seven tax years must pay £30,000 a year to continue to access the remittance basis, which rises to £60,000 after 12 tax years. After 15 years of tax residence in the UK, it is not possible to claim the remittance basis at all.

This remittance basis, far from being an alleged "loophole", was actually the standard system of taxation in the UK until 1914. Before then all UK residents, regardless of their domicile, were taxed on their worldwide income only to the extent that it was remitted to the UK. 

The UK government only decided to tax its residents on their worldwide income to help fund the First World War but decided to carve out an exemption for non-doms. 

More than 100 years later, this exemption remains; presumably because successive governments have recognised the net benefits that attracting internationally mobile high-net-worth persons to the UK brings to the UK economy.

By Howard Bilton, chairman and founder of The Sovereign Group