It was not that long ago that all individuals who were resident in the UK but not domiciled were able to be on the remittance basis of taxation.
While UK income and gains were taxed in the same way as everyone else, overseas sources were only taxed to the extent they were brought (remitted) to the UK.
In 2008 that all changed. Initially those in the UK for more than seven years had an annual charge of 30,000 imposed if they wanted the remittance basis. That charge later rose to 50,000 for those in the UK for more than 12 years and, as announced in the December 2014 Autumn Statement, this will rise further to 90,000 per annum for those who have been resident in the UK for more than 17 years.
Effectively, a non-dom can limit their liability on overseas income and gains to the payment of the applicable charge.
That higher charge may, in itself, mean that many more non-UK domiciled individuals who have been long term in the UK choose to pay tax here on their worldwide income.
To make the charge worthwhile, it probably means that a non-domiciled individual needs to have around 8m of income producing assets overseas and none of those monies are needed in the UK.
If the increased charge for the remittance basis was not enough, last week the government launched a consultation on whether it should be paid for a minimum period of three years.
Given the cost of the annual charge, non-doms could plan around the need to pay the charge every year, typically using investment products and wrappers so that overseas profits only arise every few years and the charge only needing to be paid then. The government wants to stop this dipping in and out of the remittance basis.
However, if the plan for a minimum three years of the charge is introduced, this increases the 90,000 cost to an effective 270,000 charge. That pushes the remittance basis charge into the realms of only being available for the ultra-wealthy or those who are short-term in the UK. Other proposals suggest that if a non-dom opts out of the remittance basis they cannot opt back in for three years.
What is clear is that the tax benefits of being non-dom are being reduced year on year and while those benefits remain accessible for those in the UK for the short term only, it seems that those who are long term in the UK need to be ultra-wealthy.
Even the non-doms will have a squeezed middle !
Gary Heynes is national head of private client at Baker Tilly.