Mr Miliband’s non-dom gamble

Readers cannot fail to be aware of Labour’s manifesto commitment, to be announced today, to abolish the UK tax advantages available to individuals domiciled outside the UK.

It is a gamble in both a financial and a political sense. There are many financial unknowns including the level of overseas income and gains that go untaxed under the current system (for they are quite properly not reported); the planning including asset shifting which would undoubtedly be undertaken in the face of such a proposal; the number of individuals currently resident in the UK and paying the non-dom “user charge” whose response to such a change would be to up sticks and leave; the number of individuals who in the future would be deterred from locating to the UK; and, crucially, the effect on the wider UK economy of pulling out the welcome mat from under the feet of a numerically small but wealthy and influential group of people.

Politically, the gamble is scarcely less: Labour must be judging that the electoral gain from those who will see the proposal as enhancing fairness will outweigh the electoral loss from those who will see it as evidence of Labour’s hostility towards wealth creation and of a propensity to tax and spend.

We suspect on balance that this is a gamble which Mr Miliband will live to regret. We may be wrong: but only time will tell. Meanwhile non-doms cannot make plans with any certainty.

David Whiscombe


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