Non-domicile Tax Status

Nigel Mills Excerpts

Tuesday 31st January 2023 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the hon. Member for Bristol East (Kerry McCarthy). Just to confirm, I will not be voting for the motion. It clearly is nonsense that we could require the Chancellor to publish all the things he has been considering in the lead-up to the Budget in March. However, I look forward to the Government sticking by that principle and to our not reading the Budget in the Sunday paper the week beforehand—I fear I may be a little disappointed. However, I gently say to the Minister that, if he or the Chancellor appear at a Select Committee after the Budget and come up with a number as a reason why they did or did not make a policy change, it is not unreasonable to put in the public record how they came to that number. Had the shadow Minister just stuck to his first calculation in the motion, he may have had a little more support for it. But I cannot vote for the whole motion.

I actually support ending the current non-dom status. I think it is outdated and I do not think people can make a coherent case for the rules as they stand. The idea that where my father was born should define my tax treatment is clearly nonsensical and we need to find a more modern way. We need to stand back and have a proper look at how we handle the complex area of residents and non-residents across our tax regime, and probably across our benefits and access to public services regime. When we look at this, we have to navigate all manner of different terms: not just “residents”, but “ordinary residents”, “domicile”, “deemed domicile”, “habitual residents” and “settled status”. All these things are trying to do the same thing: work out when someone is legally resident in the UK sufficient to trigger certain tax obligations or entitlements.

Having left the EU, where we had to tweak our rules to try to get around staying compliant with freedom of movement, freedom of establishment and all those things, it would make sense to step back and have a full review of what we are trying to do in this policy area, what we are trying to tax and what we are not trying to tax, so we could have coherent policies and a new law that people could understand—both those here and those coming here.

Having worked as a tax adviser, I can say that, when one has clients bringing people over to the UK to work, they have to incur quite a lot of cost trying to work out what their tax position is, what they have to comply with, what they do not have to do and what they should do before they come and what they should not. If we can make a clearer, simpler regime, that would be far more beneficial all the way around, especially as the world has moved on and the economy has moved on. These rules were written decades, or hundreds of years ago. They do not really work for a modern, mobile, dynamic economy where people can move money at the click of a finger through the internet. What is a UK-based asset and what is not? If I have just moved it into a crypto account held in Brazil, is that really a UK asset? What is my income on that? Is it in the UK that I have the tax or is it not? We need to have a thorough review of how all these rules work, so that we can have a coherent system and not just play around the edges with individual bits, because we will end up in a slightly different mess and having slightly different loopholes from those that we had.

As part of that—I think when we, including the shadow Minister, are talking about abolishing non-dom status, we mean recreating something similar but for a shorter time and with slight restrictions in place—we absolutely need to have temporary resident’s relief, whereby, if you come here for a short time, you pay tax on what you earn here and on the assets you have here, but you do not pay tax on whatever you have earned already abroad and you never bring here and never will. I think that would be too strong a deterrent for people to come here.

I think we could find consensus on what a coherent policy looks like, but the Government should go away and try to rethink all these rules and make sure that they work for a modern, dynamic, global and mobile economy. Otherwise, one day we will find out that we have something that you can drive a coach and horses through and it is not at all fit for the way we work these days.