The UK tax authority HMRC has released some statistical information on non-domiciled individuals in response to a request made under the legislation on freedom of information.

Individuals who are not domiciled in the UK may elect to pay UK tax on income and gains arising in the UK or remitted to the UK from abroad (known as the remittance basis). This is more favorable treatment than the taxation for individuals resident and domiciled in the UK who must pay income tax on their worldwide income.

Concept of domicile

The concept of domicile under UK general law refers to the country that a person ultimately considers as home. Each person has a “domicile of origin” at birth, this being the jurisdiction that is regarded as home by that person’s father at the time of their birth. The domicile of a person cannot legally be changed until the age of sixteen, and until this is possible their domicile will depend on the domicile of the person they are legally dependent upon.

An individual is however entitled to later acquire another jurisdiction as a domicile, known as the “domicile of choice”. The domicile of choice is the country where that person has decided to settle down and regards as a permanent home.

Information released by HMRC

The information issued by HMRC in response to a freedom of information request reveals that there were approximately 115,000 individuals claiming to be non-domiciled in 2012/13. Of these, 67,000 paid taxes on their worldwide income and gains under the general tax rules while around 48,000 elected to be taxed under the remittance basis on income and gains arising in the UK or remitted to the UK.

Non-domiciled individuals may opt for taxation under the general rules or under the remittance basis. Those electing to be taxed under the remittance basis pay an annual charge known as the remittance basis charge. This amounts to GBP 30,000, GBP 60,000 or GBP 90,000 depending on the number of years the individual has been resident in the UK.

HMRC reported that the number of non-domiciled individuals who had been born in the UK and were tax resident in the UK has been between 780 and 840 in all the years since 2008.

Possible legislative changes

The information released by HMRC may bring some pressure in the UK Parliament for a further change in the tax rules for non-domiciled individuals. Earlier in the year the government published a consultation document on possible further changes to the non-domiciled tax rules and the issue of non-domiciled individuals was also discussed during the recent election campaign.

Possible changes to the UK tax rules on non-domiciled individuals could include an increase in the remittance basis charge; a requirement that an individual electing to pay the remittance basis charge should pay it for at least three years; or even the removal of non-domiciled status from individuals who have been resident in the UK for a certain number of years. There is a possibility that changes could be included in the second UK budget for 2015, due to be announced on 8 July 2015.