Britain’s general election campaign was finally sparked into life after Ed Miliband
promised to abolish the non-domicile rule that allows many of Britain’s
richest permanent residents to avoid paying tax in the UK on their
worldwide income.
In the biggest tax row of the election so far, George Osborne accused Labour of “tinkering around the edges” as the two coalition parties declined to follow Miliband’s lead in moving to end a colonial-era symbol of inequity in the tax system.
The two coalition parties criticised Labour after it said that the non-dom rule, introduced by William Pitt the Younger in the late 18th century, has been wide open to abuse and offends the moral basis of taxation. Everyone who has made the UK their permanent home should pay full UK tax on all their income and gains, Miliband will argue.
In a speech in Warwick on Wednesday, the Labour leader is expected to say that the non-dom rule, believed to be used by more than 110,000 wealthy people in a system unique to the UK, is born of a discredited belief that “anything goes for those at the top and that what is good for the rich is always good for Britain”.
Non-doms pay UK income tax and capital gains tax on their UK sources of income and gains, and whatever income generated overseas they choose to remit to the UK. By contrast, UK domiciles have to pay tax on all of their income and gains, wherever in the world they are made – Britain or overseas.
The chancellor, who is conscious of poll findings that the Tories are seen as the party of the rich, realised overnight that he had to tread with care in response to a Labour plan to crack down on multi-millionaires. Osborne therefore moved to unpick the Labour announcement by saying that it is not in fact abolishing the non-dom rule on the grounds that the rule will remain in place for non-doms who stay in the UK for no more than two to three years.
“The small print of Labour’s policy makes clear that they are not actually abolishing non-dom status,” the chancellor said. “Either they are going to abolish non-dom status altogether which would cost our country hundreds of millions of pounds in lost tax revenues and lost investment – the reason they did nothing on this during 13 years in office. Or they are just tinkering around the edges and making small adjustments to the rules on how long people can be non-dom.
In the biggest tax row of the election so far, George Osborne accused Labour of “tinkering around the edges” as the two coalition parties declined to follow Miliband’s lead in moving to end a colonial-era symbol of inequity in the tax system.
The two coalition parties criticised Labour after it said that the non-dom rule, introduced by William Pitt the Younger in the late 18th century, has been wide open to abuse and offends the moral basis of taxation. Everyone who has made the UK their permanent home should pay full UK tax on all their income and gains, Miliband will argue.
In a speech in Warwick on Wednesday, the Labour leader is expected to say that the non-dom rule, believed to be used by more than 110,000 wealthy people in a system unique to the UK, is born of a discredited belief that “anything goes for those at the top and that what is good for the rich is always good for Britain”.
Non-doms pay UK income tax and capital gains tax on their UK sources of income and gains, and whatever income generated overseas they choose to remit to the UK. By contrast, UK domiciles have to pay tax on all of their income and gains, wherever in the world they are made – Britain or overseas.
The chancellor, who is conscious of poll findings that the Tories are seen as the party of the rich, realised overnight that he had to tread with care in response to a Labour plan to crack down on multi-millionaires. Osborne therefore moved to unpick the Labour announcement by saying that it is not in fact abolishing the non-dom rule on the grounds that the rule will remain in place for non-doms who stay in the UK for no more than two to three years.
“The small print of Labour’s policy makes clear that they are not actually abolishing non-dom status,” the chancellor said. “Either they are going to abolish non-dom status altogether which would cost our country hundreds of millions of pounds in lost tax revenues and lost investment – the reason they did nothing on this during 13 years in office. Or they are just tinkering around the edges and making small adjustments to the rules on how long people can be non-dom.
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