Labour pledges to reform non-dom tax rules benefiting ‘privileged few’

Labour says it will reform “non-dom” status to stop people who make their home in Britain from being able to avoid paying UK tax on foreign income for up to 15 years.

The party said that if elected it would cut the length of time that the advantage was available so that only those genuinely staying in the country for short periods would benefit.

It comes after the recent revelation that Chancellor Rishi Sunak’s wife Akshata Murthy held non-dom status, which estimates suggest may have saved her £20m in taxes on dividends from shares in Infosys, the Indian tech firm founded by her billionaire father.

Ms Murthy has since announced that she will pay UK taxes on her worldwide income.

Health Secretary Sajid Javid also revealed that he had held non-dom status for six years while working in banking and before entering politics.

Labour said it was time to shake up the rules, which are more than 200 years old, bringing them into line with other major economies such as France, Germany and Canada.

Rachel Reeves, the shadow chancellor, told Sky News: “If you make Britain your home you should pay your taxes here.

“That is more important than ever because at the moment we are in a cost of living crisis. Everybody is noticing those rising prices.”

She said that with taxes being increased for working people and employers it was “absolutely right that loopholes are closed down that mean that there are a privileged few who are getting out of paying their fair share of taxes”.

Ms Reeves described the system as “outdated, unjustifiable and unfair”.

She said: “We would abolish non-dom status but like in other modern economies we would have rules for people who are temporarily in the UK for a short period of time.

“In Germany and in Canada that is six months, in Japan it is five years.

“We will work with businesses for getting the appropriate period of time – but in the UK you can be here for year after year after year… if you live in the UK for 15 years you should be paying your taxes here.”

The status applies to more than 75,000 people.

In a briefing paper, Labour said 1,900 non-doms who have been in the UK for between seven and 15 years pay the annual charge of £30,000 to £50,000 to keep that status.

Those fees raise £70m a year for the Treasury but save those people “significantly more”, the party said.

It cited a study by the EU tax observatory estimating that the gain to the Treasury from eliminating non-dom rules could be more than £1bn.