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General Election 2015: Policy Announcement

Labour plans to abolish 'non-doms'

A Labour government would abolish the non-domicile rule that allows around 116,000 wealthy UK residents to limit the tax paid on earnings outside the country.

Ed Miliband is set to tell an audience in Warickshire today that non-dom status is a symbol of tax avoidance and "makes Britain an offshore tax haven."

Mr. Miliband, once again making the accusation that the Conservatives are for the wealthy, will say that the rich should not be allowed to "operate under different rules" and that the non-dom tax laws can not be found in any other major developed country, so why the UK?

The next Labour government would have a clear principle that anyone permanently resident in the UK will pay tax in the same way. These additional contributions to the Treasury would raise ‘hundreds of millions of pounds’ according to the party and help pay off the nation’s deficit.

This policy announcement may help the Labour party get back in the minds of voters. Following the latest statistics battle with the Conservatives over tax this is a simple but perhaps effective policy message.

Some argue that these tax laws actually encourage skilled workers to come to the UK. In response the Conservatives said the policy was ‘confused’ and they had a better record of raising more money from non-doms than other previous governments.

Who are Non-Doms

Non-doms or non-domicile are defined as British residents who pay tax on their UK earnings but whose permanent home is deemed to be outside the UK and therefore do not have to pay UK tax on foreign income as long as they do not transfer it to the UK - or they pay a charge of at least £30,000 instead of a full assessment.

There are an estimated 116,000 non-doms living in the UK who only have to pay UK taxes on money they bring into the country. Their income from overseas investments does not have to be declared. The 200-year-old rule has been criticised for being open to exploitation by a jet-set elite looking to minimise their tax liabilities.

In 2008, Labour announced plans to charge non-doms £30,000 a year if they had been resident in the UK for seven of the previous 10 years.

George Osborne increased this to £90,000 for those who have lived here for 17 out of the past 20 years.

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