Who are the non-doms?

Photo by Papaioannou Kostas on Unsplash

More than 93% of those classified in a recent report as non-doms in 2018 were born abroad. An additional 4% have lived abroad for a substantial period. Non-doms are wealthy, mainly earning over £5 million a year, and could well be a top earning banker, or the governor of the bank of England (Wikipedia lists former Governor of the Bank of England Mark Carney as a non-dom), or a Conservative candidate for the Mayor of London. Or now indeed the wife of the Chancellor of the Exchequer. interestingly listed on Wikipedia’s list of non-doms as a fashion designer.

According to the report The UK’s non-doms: Who are they, what do they do, and where do they live? published by CAGE Warwick, LSE International Inequalities Institute:

“In legal terms, a ‘non-dom’ refers to a person who is not domiciled in the UK. Claiming non-dom status can confer significant tax advantages. Whereas most UK residents are required to pay UK tax on their worldwide income and capital gains, a person who is resident but not domiciled in the UK is entitled to claim a special tax treatment (known as the ‘remittance basis’), whereby they only pay tax on their foreign income and capital gains if these are remitted to the UK [though many get round paying tax by using tax havens]. Additionally, whereas UK domiciliaries are liable to pay Inheritance Tax on their worldwide assets, for non-doms their foreign wealth is exempt.”

Non-dom status, non-dom meaning a non-domiciled individual, appears to be another of these quirky British conventions with no statutory basis but instead cobbled together over centuries of judicial decisions. It was originally introduced in 1799 to allow those with foreign property to shelter it from wartime taxes. According to the latest figures from HM Revenue and Customs, there were 75,700 claiming non-dom status in the UK in the tax year ending 2020.

Over the period covered by the CAGE report – 2001 to 2018 – there were a total of 490,000 unique
individuals who claimed non-dom status while being UK resident at some point. This total is roughly equivalent to 1% of all UK adults, or equivalent to the population of Manchester. A significant number of rich people who do not pay UK tax but benefit from the advanatges of living here.

Non-doms are globally connected individuals whether by birth or from time spent living abroad. Most non-
doms were born abroad though a small minority (7%) of non-doms were born in the UK. 4% of all non doms also had a UK domicile of origin, presumably because they spent a substantial period of time living

Most non-doms are towards the top of the UK’s income distribution i.e. rich, with the number of non-doms rising steeply with income. In 2018, only 0.3% of those earning less than £100,000 claimed non-dom status. This rises to 27% for those earning between £1 million and £2 million per year, and reaches 41% for those earning £5 million or more. The report stresses that these figures are for REPORTED income so probably underestimate total income. A key benefit of non-dom status is that there is no requirement to report or pay tax on foreign-source income unless it is remitted to the UK And of course there are ways of getting round that.

Around 80% of non-doms have earnings from some kind of work (or pension income) as their main source of income. Given the role of finance in underpinning top incomes in the UK, it’s hardly unsurprising that non-doms are concentrated in ’City’ jobs. Of the157,000 non-doms for whom there was industry information, 37,000 (23%) worked in finance, with almost as many again working in professional, scientific and technical jobs– in particular management consultancy and accountancy. The modal age of non-doms is late thirties to early forties, compared with late forties to early fifties for all individuals within the top 1% by income.

Most non-doms are from India, the US, Western Europe (especially France) and other English-speaking countries such as Australia, Canada, Ireland, New Zealand, and South Africa.

Non-doms are concentrated in certain areas, mainly London. In the two constituencies of ‘Cities of London and Westminster’ and Kensington, 12% of the population have claimed non-dom status at some point in the report’s sample period, compared with less than 0.5% of the entire UK adult population. They work in industries that are concentrated in London or where head offices are in London. – finance and insurance
and professional, scientifical and technical activities, including services such as management consultancy and accounting.

The only city in Scotland which has a large number of non-doms is Aberdeen. The constituency of Aberdeen South has the only significant cluster, where non-doms form 1.0% of the population. This is linked to the oil refining and petroleum extraction industries, which are disproportionately comprised of non-doms.

A map with the usual skewed size of Scotland, making it look very significantly smaller than England.

The main findings of the report are:

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