The British government closed this loophole because it's politically easier than the strategy which is actually needed: properly taxing assets.
This is much harder to evade - if you own most of Mayfair, you can't just move your assets elsewhere - they are very clearly tied to the location.
Of course, this would mean taxing powerful aristocrats, including the royal family.
With their large majority, the British government had the opportunity to do this, but decided to take an easier path. The reason why this path was easier is now becoming clear to them.
As you pay more tax, you get less services, and I dont just mean, where you elect to avoid them. You get less (or none at this point) free childcare. No umemployment benefits if you get fired. No child benefit. You can't save as much in your pension.
Then there are the semi-elective things like healthcare, education, home security. These kinda dont work for the whole society. The rich are thus paying for their own out of pocket. But they are also paying for the semi-working system for everyone else.
I think introducing a wealth tax just to balance the books without rethinking who and how accesses public funds, will just end with the rich leaving. Some may say good riddance, but the UK budget is now beyond creaking and heading for collapse.
Oh and when I say "the rich", that probably covers many people here. IIRC earning 90k per year puts you in the top 1%. A 10-15 year experience NHS doctor is in that bracket.
People earning 90k aren’t “the rich” that are doing the most egregious tax avoidance. They’re still working class. They still have to work or face destitution.
The very top sliver who own the majority of the land and assets and who never need to work a day in their life are who must be looked at; that hereditary wealth needs to begin to find itself flowing into public services more and more.
The rich benefit most from a stable society and the rule of law though.
No point owning most of Mayfair if you don't feel safe enough to enjoy your lifestyle.
And it's not just funding the police and courts that leads to this - it's making sure there aren't too many desperate people with no hope. ie paying unemployment benefit so people can live while looking for work - is all part of that stable society from which everyone benefits - but particularly the rich as they have more to lose.
The rich generally derive their wealth from the labours of a healthy and educated population. In most Western countries, these are proceeded at least in part paid by taxes and amount to a massive subsidy to those who need labour. Arguably this includes the "free childcare" mentioned above.
This is a lie. In US, most food our rules, legal system, government agencies (that are not direct transfers like doc security & Medicare) exist to protect properties and interest of the rich.
That higher income people are not seeing much of direct transfers does not mean they are not getting more benefits from the government. Even our bloated military and foreign policy is primarily still protecting US business interests globally. It’s not minimum wage peon that benefits from that. It’s owners of large capital
Yes. Progressive taxation. That's the point. Tax those who can afford it, fund equal opportunity and a basic standard of living for those who can't. Pull society up from the bottom.
As much as one can complain about specific inefficiencies or not being able to send young Jasper and Tabitha to private school because of VAT and tapered tax relief, I do think we don't take it far enough.
The reason it not working is that we have stapled our personal wealth and economy to housing. 60 years of financiers pushing for higher lending limits with looser regulation resulted in more people able to "afford" a £1m house. That drags up all the prices.
There's no simple way to reverse it this distortion but it had a knock on effect: the generationally rich, the landed gentry through to farmers have become insanely rich, through no work but HODLling all the land until they got planning permission.
I agree, wealth tax is scary but not addressing how wealth works won't fix things either.
The royal family is exempt from a lot of tax laws.
There was a bit of a scandal a few years back at just how much input the Queen got to those sort of laws, but it didn't really have legs as everyone thought she was brilliant.
But if the same thing comes out about King Charles you can bet it's going to be a bigger stink.
Genuine question as I’ve been interested in the conversation around taxing wealth: how do we do it?
I assume a new government dept. has to be set up to oversee it. Or do the wealthy self assess? Are things like shares and investments valued once? Once per year? How is a company valued? How do you know if you qualify as wealthy? Do we value everyone’s wealth? Can’t the wealthy just relocate or move assets out of reach?
I don’t expect answers to this, I’m just thinking out loud as there seem to be a lot of challenges.
A few countries seem to have tried and continued to tax wealth but it seems far from proven and only seems to “work” in Switzerland, which is a bit of an outlier
Switzerland does it and my understand is they basically just ask you to fill in a tax return every year and say how much wealth you have (all the assets you own).
Presumably they do have a department of people checking this to make sure people aren't lying, but also Switzerland is a relatively high trust society, and taxes are reasonable, so people probably don't mind paying too much.
In the UK in 2025 I'm not sure this would work, people would try and evade it and the UK government isn't competent enough to stop them
I think by "asset" OP actually means "real property", otherwise the subsequent statement of "if you own most of Mayfair, you can't just move your assets elsewhere - they are very clearly tied to the location" doesn't really make sense. You could easily move corporations around, for instance, so the statement is only really true when applied to real estate.
My answer to this (good) question is: do whatever banks do to value illiquid assets when they lend against them (this is how the wealthy largely have cash at all), then levy taxes accordingly. Hell if you want, add the taxes to the interest rate.
You don’t need new govt. dept. tax authority is enough. You do your yearly tax statement.
In NL they have access to your bank accounts or more like banks and brokers are obliged to provide state of accounts as per 1st of January.
Downside is you pay wealth tax on „possible gains” not actual gains on wealth above 40k€. If you have mortgage it of course is deducted from value of your house or any debts that you have documented.
In case you think collecting watches can make you hide the wealth, there are of course tax authority checks most likely if your wealth suddenly changes.
I don’t think the wealth taxes, fundamentally workable because you have issues you raised above, but other things like liquidity and indivisibility of assets.
I think the simpler solution if simply passing along the original cost basis to heirs (and without documentation it’s assumed to be zero). That way people or even families can defer taxes on income, but eventually they get paid.
That Socialist hotspot, Texas, taxes property at 1.8%, vs. 0% in the UK. Can't inconvenience the feudal aristocracy (i.e. parasites descended from thugs), starting with Chuck von Battenberg, Sachsen, Coburg und Gotha.
There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money.
It's a loophole the mega-rich are using to avoid tax.
The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer.
And one of the big things they've got? No capital gains on those stocks when passed to children.
So yeah, we need to tax assets as well as income. Because anything that's not taxed the rich just funnel money into it to avoid paying tax.
It's not a revolutionary idea. That I know of, the Netherlands does it, somewhat. How it works is: rather than taxing capital gains, with its myriad loopholes and counterloopholes, you tax assets directly: assume a neutral sort of "risk-free" rate of return, and then tax a percentage of that. E.g. assume yearly return of 1% on cash and savings, 6% on other assets, etc, then levy tax of 30% on that (past a tax-free allowance of 25k€ per person).
The real solution to the UK’s stagnation is accepting the truly politically difficult truth - the UK is getting poorer, year after year. The empire is long dead and gone, and their number 1 growth company and success story of the last decade is OnlyFans, a global smut purveyor.
The UK needs to radically reduce its social safety net and simultaneously cut taxes, at least for new companies and small businesses. The only way out is real, sustained, long term growth and innovation. Stealing ever more of a shrinking pie is already running out of steam.
Privatisation and attacking social security does not work, it just makes the wealthy even wealthier.
Not the solution is fair taxation every trade made in the country, if you make business in a country you need pay taxes there for the transactiona made there.
Otherwise you just extract value out of the country, without giving back.
To me there is no worse thievery than tax evasion, it's literally robing a nation.
> The UK needs to radically reduce its social safety net and simultaneously cut taxes, at least for new companies and small businesses. The only way out is real, sustained, long term growth and innovation. Stealing ever more of a shrinking pie is already running out of steam.
I was under the impression they had done that already.
Though one can't help but think it wont be radical enough for conservatives until we simply dispose of those unable to work through some dystopic mechanism or other.
Oh wow I had no idea OnlyFans is from UK. Always thought it was US.
>The UK needs to radically reduce its social safety net and simultaneously cut taxes
Unfortunately that is not a popular opinion in the UK. They want to tax everything, taxing the rich is popular among voters which is why they are doing it. And again the consequence have long been known or told. They are doing it anyway.
Most of the street in London is empty. UK is either number 1 or number 2 in millionaires fleeing the country after China. Property pricing are falling somewhat not because of more supply but because those asset are being sold as part of those moving abroad.
Does London need the Global Rich hanging around if they’re not willing to pay taxes? Is it necessary to have the tax bring in 30 Billion in order for it to be considered a success?
If nothing else, this tax demonstrates to those who DO pay tax, that the Government is willing to treat earners equally and fairly, regardless of how much tax it brings in.
They do pay taxes though. Non domiciled are roughly 0.11% of UK residents and pay about 1.24% of UK taxes. This change is likely to lower tax revenues.
> Non domiciled are roughly 0.11% of UK residents and pay about 1.24% of UK taxes
It's curious that the percentages used to defend not taxing the rich (whether they are UK citizens, or operating as "non-doms") tend to be what percentage of the tax burden they pay. But it's never what percentage of their income and capital gains they pay as tax.
I think the latter is a fairer representation, considering we have a progressive taxation system. Someone who is earning over £125k a year should be paying close to 45% of their income and capital gains.
So what you are saying is, it eventually trickles down?
edit: The reality is they don't spend enough for it to offset the harms that wealth inequality brings.
I know a couple of people who have been using this London loophole as a way to avoid paying taxes anywhere at all. They are not residents here, they are not residents there, and their income is earnt globally. So they think they shouldn't have to pay tax to any particular country.
Are they? Or are they there to outcompete ordinary people for houses, labour, etc?
We don't need a bigger market for luxury dog sitters or sports car manufacturing, better allocate those resources for childcare, elder care, or other chronically understaffed fields.
There are plenty of people with money, who do pay taxes, who can start those businesses. We don’t need trickle down economics in order to function as a society.
"slightly more indirectly" is an interesting way to say "by distorting local economies and politics around the idiosyncratic needs and desires of a very small number of uber-wealthy foreigners."
The irony of a superrich claiming to feel 'unwelcome' in a country while claiming non-domiciled status in it cannot be lost on the author. Also, for all the talk of scaring away "job creators" I doubt the guy running a "Dubai-based venture capital firm" was creating many jobs in the UK.
The number of non-doms fell from 74,100 to 73,700 in the year up to April 2024, whilst tax intake from them increased by £100m. I do not consider 400 out of 74,100 as them fleeing....
[1]: Non-dom tax take jumped £100mn in 2023-24 despite falling numbers - https://on.ft.com/3Gx1MXU via @FT
Why does it have to be assumed that having the ultra wealthy living in your country and not paying taxes is a net positive? It seems close minded to just ignore the possibility that those people are causing more harm than good.
I think the consensus view is that they are massive net positive contributors (they still pay a lot in taxes in terms of things stamp duty or VAT, they spend lots of money in the country supporting business and employing people, and they don’t consume much in the way of resources like using the NHS or publicly funded schools).
I think the optics are clearly bad but the question I think people really have to ask is what they rather these people paying something in the country, or nothing at all (because there’s nothing keeping them there if it’s viewed as too expensive to stay)
It's not an assumption. The article stated that non domiciled residents DO pay a lot of taxes. That's why the UK is concerned that they are leaving and modelled against that risk.
I did a quick check and it seems like non dom's are about 0.11% of UK residents and pay about 1.24% of UK taxes. And this doesn't account for indirect benefits such as taxes paid on wages they generate.
if i understood the article, these people (1) didn’t make their money in your country, and (2) are not making money in your country. they just happen to reside there. it seems nonsensical to me to tax revenue that was made in foreign land. but people who love and swear by taxes think that more tax revenue can solve world hunger.
if the uk wants tax money on revenue maybe they should incentivize these so-called super-rich to run their affairs from within the uk?
I’d presume they are spending a lot of money locally and probably employing a staff locally and driving other economic activity locally but I guess I could be wrong.
This might be persuasive if the reports didn't indicate that substantially more non-doms are leaving the UK than expected. The options are not a binary UK or Andorra.
> a centuries-old tax loophole, abolished in April, that catered to the global rich. The nondomiciled—or non-dom status, as it is known—allowed foreigners living in the U.K. to pay tax only on what they earned domestically. Profits made abroad were ignored unless brought into the U.K.
I don't understand. Why is this a loophole? Why is money earned abroad and kept abroad taxable not by a foreign government but by the UK government?
In the US you pay taxes in the state where you earn the income and where you live. So for example if you own a pass-though tax corporation and it earns income in all states then you must file and pay taxes in all states.
It’s standard in Europe and many other countries to tax their “tax residents” on their worldwide income. The tricky part is that sometimes that external income is also taxed at source, but this is usually taken care of by tax treaties, which means that you pay the higher of the tax rates, but only once.
Because it allows people to very easily funnel their income through offshore companies, and avoid being taxed on it because it’s “earned” in Cyprus or Cayman Islands.
_good_. the average person is struggling to feed and shelter themselves and we’re worried that if we don’t coddle the rich the economy will collapse. let them leave and we can rebuild a society that supports everyone.
Wrong, our society is here to support pensioners (one fifth of the population) and those on disability benefits (one quarter of the working age population). Every millionaire that leaves, leaves a disproportionate hole in the amount of tax collected and we borrow more to cover the gap. This will continue until the IMF is forced to step in.
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This is much harder to evade - if you own most of Mayfair, you can't just move your assets elsewhere - they are very clearly tied to the location.
Of course, this would mean taxing powerful aristocrats, including the royal family. With their large majority, the British government had the opportunity to do this, but decided to take an easier path. The reason why this path was easier is now becoming clear to them.
Then there are the semi-elective things like healthcare, education, home security. These kinda dont work for the whole society. The rich are thus paying for their own out of pocket. But they are also paying for the semi-working system for everyone else.
I think introducing a wealth tax just to balance the books without rethinking who and how accesses public funds, will just end with the rich leaving. Some may say good riddance, but the UK budget is now beyond creaking and heading for collapse.
Oh and when I say "the rich", that probably covers many people here. IIRC earning 90k per year puts you in the top 1%. A 10-15 year experience NHS doctor is in that bracket.
The very top sliver who own the majority of the land and assets and who never need to work a day in their life are who must be looked at; that hereditary wealth needs to begin to find itself flowing into public services more and more.
According to the public data for 2023-2024, top 1% is around £180-200k, so you're off by quite a bit. £90k is around 5-6%. This is gross, not net.
In the U.S., the top 1% is around $570-600k according to 2024 census numbers.
No point owning most of Mayfair if you don't feel safe enough to enjoy your lifestyle.
And it's not just funding the police and courts that leads to this - it's making sure there aren't too many desperate people with no hope. ie paying unemployment benefit so people can live while looking for work - is all part of that stable society from which everyone benefits - but particularly the rich as they have more to lose.
This is a lie. In US, most food our rules, legal system, government agencies (that are not direct transfers like doc security & Medicare) exist to protect properties and interest of the rich.
That higher income people are not seeing much of direct transfers does not mean they are not getting more benefits from the government. Even our bloated military and foreign policy is primarily still protecting US business interests globally. It’s not minimum wage peon that benefits from that. It’s owners of large capital
As much as one can complain about specific inefficiencies or not being able to send young Jasper and Tabitha to private school because of VAT and tapered tax relief, I do think we don't take it far enough.
The reason it not working is that we have stapled our personal wealth and economy to housing. 60 years of financiers pushing for higher lending limits with looser regulation resulted in more people able to "afford" a £1m house. That drags up all the prices.
There's no simple way to reverse it this distortion but it had a knock on effect: the generationally rich, the landed gentry through to farmers have become insanely rich, through no work but HODLling all the land until they got planning permission.
I agree, wealth tax is scary but not addressing how wealth works won't fix things either.
There was a bit of a scandal a few years back at just how much input the Queen got to those sort of laws, but it didn't really have legs as everyone thought she was brilliant.
But if the same thing comes out about King Charles you can bet it's going to be a bigger stink.
I assume a new government dept. has to be set up to oversee it. Or do the wealthy self assess? Are things like shares and investments valued once? Once per year? How is a company valued? How do you know if you qualify as wealthy? Do we value everyone’s wealth? Can’t the wealthy just relocate or move assets out of reach?
I don’t expect answers to this, I’m just thinking out loud as there seem to be a lot of challenges.
A few countries seem to have tried and continued to tax wealth but it seems far from proven and only seems to “work” in Switzerland, which is a bit of an outlier
Presumably they do have a department of people checking this to make sure people aren't lying, but also Switzerland is a relatively high trust society, and taxes are reasonable, so people probably don't mind paying too much.
In the UK in 2025 I'm not sure this would work, people would try and evade it and the UK government isn't competent enough to stop them
You don’t need new govt. dept. tax authority is enough. You do your yearly tax statement.
In NL they have access to your bank accounts or more like banks and brokers are obliged to provide state of accounts as per 1st of January.
Downside is you pay wealth tax on „possible gains” not actual gains on wealth above 40k€. If you have mortgage it of course is deducted from value of your house or any debts that you have documented.
In case you think collecting watches can make you hide the wealth, there are of course tax authority checks most likely if your wealth suddenly changes.
I think the simpler solution if simply passing along the original cost basis to heirs (and without documentation it’s assumed to be zero). That way people or even families can defer taxes on income, but eventually they get paid.
It's a loophole the mega-rich are using to avoid tax.
The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer.
And one of the big things they've got? No capital gains on those stocks when passed to children.
So yeah, we need to tax assets as well as income. Because anything that's not taxed the rich just funnel money into it to avoid paying tax.
Simple, and more effective!
It's these that need to be tackled - not just because of tax evasion, but because they are also a large part of the workings of organised crime.
The UK needs to radically reduce its social safety net and simultaneously cut taxes, at least for new companies and small businesses. The only way out is real, sustained, long term growth and innovation. Stealing ever more of a shrinking pie is already running out of steam.
Not the solution is fair taxation every trade made in the country, if you make business in a country you need pay taxes there for the transactiona made there.
Otherwise you just extract value out of the country, without giving back.
To me there is no worse thievery than tax evasion, it's literally robing a nation.
With the exception of certain pension benefits there isn't much money flowing into these programs to begin with.
I was under the impression they had done that already.
https://en.wikipedia.org/wiki/United_Kingdom_government_aust...
Though one can't help but think it wont be radical enough for conservatives until we simply dispose of those unable to work through some dystopic mechanism or other.
>The UK needs to radically reduce its social safety net and simultaneously cut taxes
Unfortunately that is not a popular opinion in the UK. They want to tax everything, taxing the rich is popular among voters which is why they are doing it. And again the consequence have long been known or told. They are doing it anyway.
Most of the street in London is empty. UK is either number 1 or number 2 in millionaires fleeing the country after China. Property pricing are falling somewhat not because of more supply but because those asset are being sold as part of those moving abroad.
It's curious that the percentages used to defend not taxing the rich (whether they are UK citizens, or operating as "non-doms") tend to be what percentage of the tax burden they pay. But it's never what percentage of their income and capital gains they pay as tax.
I think the latter is a fairer representation, considering we have a progressive taxation system. Someone who is earning over £125k a year should be paying close to 45% of their income and capital gains.
The question is: are they? If not, why not?
edit: The reality is they don't spend enough for it to offset the harms that wealth inequality brings.
I know a couple of people who have been using this London loophole as a way to avoid paying taxes anywhere at all. They are not residents here, they are not residents there, and their income is earnt globally. So they think they shouldn't have to pay tax to any particular country.
We don't need a bigger market for luxury dog sitters or sports car manufacturing, better allocate those resources for childcare, elder care, or other chronically understaffed fields.
[1]: Non-dom tax take jumped £100mn in 2023-24 despite falling numbers - https://on.ft.com/3Gx1MXU via @FT
There was no magical property of London that attracts people DESPITE higher taxes.
Very difficult to have any policy discussion when a second order effect is involved.
I think the optics are clearly bad but the question I think people really have to ask is what they rather these people paying something in the country, or nothing at all (because there’s nothing keeping them there if it’s viewed as too expensive to stay)
I did a quick check and it seems like non dom's are about 0.11% of UK residents and pay about 1.24% of UK taxes. And this doesn't account for indirect benefits such as taxes paid on wages they generate.
if the uk wants tax money on revenue maybe they should incentivize these so-called super-rich to run their affairs from within the uk?
Deleted Comment
If I happen to work for a foreign corporation, I don’t get to skip paying tax.
Most of the world taxes only income earned in that country.
> If I happen to work for a foreign corporation, I don’t get to skip paying tax.
Sure, because you earned it your country, and not in the country of domicile of foreign corporation.
EDIT: Correction, I see now that most countries do tax worldwide income, just that they have DTA so you offset taxes paid abroad.
It's only the US which taxes worldwide income. It's not true for rest for the world.
I think we should be taking a page out of French History
Every so often I think the wealthy classes need a reminder that they only get to have what they have at the pleasure of the lower classes
Dead Comment