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Labour pledges to close ‘non-dom’ tax loophole

by: Alice Rigby
  • 08/04/2015
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Labour pledges to close ‘non-dom’ tax loophole
Labour will close the 'non-dom' tax loophole should it come to power in May, party leader Ed Miliband is set to announce later today.

The pledge to abolish the controversial tax status will be announced as part of a wider unveiling of the party’s manifesto.

The ‘non-dom’ tax rule allows certain citizens living in Britain indefinitely to claim another country as their domicile.

They then pay tax only on UK earnings and any overseas earnings they remit to the UK, rather than paying tax on all earnings as per those domiciled in the UK.

According to the BBC, Ed Miliband will say he is targeting an “increasingly arcane 200-year-old loophole” which “makes Britain an offshore tax haven”.

He will add that the rules for granting non-domicile status are too lax. Those citing the status can use a range of justifications including overseas earnings, foreign parentage, or previous residency abroad.

In last year’s Autumn Statement, Conservative Chancellor George Osborne announced a new £90,000 charge for people who are non-domiciled for tax purposes but have lived in the UK for 17 of the last 20 years.

The previous Labour government had initially introduced the levy, charging non-domiciles £30,000 if they are non-domiciled for seven of the previous ten years for tax purposes.

The announcement will come the day after shadow chancellor Ed Balls claimed in a BBC interview that the Tory party is manoeuvring to cut the higher tax rate further from the 45% it was reduced to in 2013.

He argued the ‘secret’ plan had always been in place, saying “when George Osborne cut the top rate of income tax, we know that he and David Cameron wanted to go further and actually cut it to 40p”.

However, Osborne strongly denied the claims, saying such a cut is not currently the party’s plan.

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