Treasury raked in £9bn from non-doms last year

The Treasury raked in almost £9bn in taxes from non-doms last year, official data has shown, as Labour prepares a crackdown that threatens an exodus of the super-wealthy. 

Revenue from non-domiciled taxpayers jumped by £474m to £8.9bn in the tax year ending in 2023, according to data published by HM Revenue & Customs.

This was up 6pc year-on-year and the highest total since the tax year ending in 2017, when the Government tightened the rules on who was eligible to qualify for the tax status.

Experts warned that Labour’s plans to abolish the non-domiciled tax system risks drying up a crucial revenue stream for the Treasury.

So-called non-doms are people who live in the UK but who have registered a permanent address overseas. They have to pay British tax rates on the money that they earn within the UK, but not on earnings made internationally.

The number of non-dom taxpayers in the UK grew by 7pc year-on-year to 74,000, the latest figures showed. This was driven by an 18pc surge in new arrivals, with 12,900 non-dom taxpayers moving to the UK in the tax year ending April 2023.

But wealth managers have warned this inward flow could soon go into reverse, as Labour’s planned overhaul risks pushing some of the highest earners to lower tax jurisdictions such as Italy, which has a flat annual charge of €100,000 (£85,000) on income earned abroad.

Nicholas Hyett, investment manager at Wealth Club, said: “Non-doms will soon be extinct in the UK … these numbers are therefore a glimpse into the past, soon to be part of the fossil record.”

Mr Hyett urged Rachel Reeves to make sure not to alienate wealthy individuals with the new tax system.

He said: “While taxing the rich might raise more revenue, it also runs the risk that the global elite decide to move their taxable wealth somewhere with a lighter touch tax regime.”

More than two thirds of the £8.9bn paid by non-doms came from income tax, while £2.3bn came via National Insurance contributions. A further £384m came from capital gains tax.

Telegraph analysis of HMRC data shows that while total tax take from non-doms made up 1.2pc of total tax revenue in the tax year ending 2023, non-doms accounted for a much larger proportion of the Treasury’s income tax take, at 2.5pc.

It was a Labour manifesto promise to abolish the tax status “once and for all”, a move that the party billed as a crucial revenue raiser for the public purse.

Alongside a crackdown on tax avoidance, Labour said scrapping the non-dom regime would raise £5.2bn that it will use to cut NHS waiting times.

Labour will replace the system with “a modern scheme for people genuinely in the country for a short period”.

The party has also pledged to end the use of offshore trusts to avoid inheritance tax.

The HMRC figures come after Ms Reeves warned on Monday that Labour had inherited “the worst set of circumstances since the Second World War” and outlined the pressures on the public finances.