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The non-dom bomb

3 October 2007

eFinancialCareers UK

The Tories want to levy a £25k flat tax on non-domiciled foreigners living in the UK. Will it really make any difference to bankers?

Not according to the head of recruitment at one US house in London. “This is exactly the same as the chancellor whacking a £400 per year environmental tax on £60k Chelsea tractors [four wheel drive vehicles],” he says. “It will make a difference to the Revenue’s coffers, but absolutely no difference to the bankers earning millions who’ll have to pay it.“

Not everyone’s so sure the City will escape unscathed. The Financial Times yesterday said the proposed tax would discourage junior non-dom bankers from working in London.

Chris Sanger, head of tax policy at Ernst & Young, says there are certainly plenty of bankers from the likes of the US and Australia who stand to be stung by the tax. “A good way to establish whether you’re non-domiciled is where you’d like to be buried,” he says.

Non-domiciled residents live in the UK full time and currently pay tax in the UK on their UK income. However, they do not pay UK tax on income earned offshore – a policy that’s out of line with other major industrial countries.

One US banker working in the City says London’s already punitively expensive: “The cost of living here is so awful and the taxes I pay are so high that I prefer not to think about it.”

Comments (3)

Tax foreign bankers and you force the junior europeans to leave. Banks then will not hire junior English people to cover Europe, they will have to move somewhere else. It seems that they forgot that London came back into life in the 60s because of US eurobond taxation.

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Comments (3)

  • This is absolutely ridiculous - instead of increasing tax indiscriminately the govt. will do well to run NHS efficiently - that alone would save them billions of $$$ - the uk MPs shud stop being tax bullies - with already high tax rate any further increase will make London uncompetitive - i am going to be packing my bags soon from this city if such stupid measures are brought in - who are they trying to appease? they' rather save more money by not being war mongers and sending their troops all across the globe and killing people

    I wish defeat to Gordon Brown - i don't want to be seeing his ugly face again

    Anon 04 Oct 2007

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  • Well, the Inland Revenue brochures state that to quality for Domicile treatment, you must provide strong evidence that you intend to reside permanently in the UK. If you don't intend to reside and try to prove, you will be breaking the law.
    My cleaning lady is from Bulgaria intending to stay here for a few years only to earn some money, so she won't be able to qualify for non-docimile status (provided that she understands that she needs to do that given her poor English). This means that she will have to pay £25,000 each year, or else she will be breaking the law.

    This law would pretty much end people from EU (in particular Eastern Europe) and many other countries coming to the UK to earn money but not to die here. Most foreigners living in the UK don't earn enough to pay £25,000 on top of what they already earn - I believe that £25,000 is actually higher than average income of a UK domiciled person.

    I guess that that is its true goal, that is, to end immigration to the UK (except for those people coming from distressed regions like Africa and some Asian and Latin American countries who consider it better to stay permanently).

    Non-domiciled 04 Oct 2007

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  • This is so wrong. London is what it is because it is the financial centre for Europe. Tax foreign bankers and you force the junior europeans to leave. Banks then will not hire junior English people to cover Europe, they will have to move somewhere else. It seems that they forgot that London came back into life in the 60s because of US eurobond taxation... Banks are about brains and computers, both can move out fast.

    Non-domiciled 04 Oct 2007

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