HM Revenue & Customs said the number of UK residents escaping tax on income or capital gains held in offshore bank accounts had declined from 139,000 to 123,000 in the year prior and after the launch of the £30,000 remittance basis charge in April 2008.
The 11.5pc decline was the first for five years and is likely to have been repeated in 2010 as more long-term non-dom residents become liable to the change, lawyers said.
McGrigors, the law firm which secured the figures under a Freedom of Information request, said the “collapse” in numbers of non-doms should be a warning to the Government not to tighten the rules on how offshore wealth is taxed.
The Coalition has pledged a review to assess whether non doms were making “a fair contribution to reducing the deficit” and a Treasury spokesman said last night that the review was “ongoing”. “A further announcement will be made at the appropriate time,” he said.
George Osborne, the Chancellor, proposed a £25,000 annual levy while in Opposition and Deputy Prime Minister Nick Clegg described the £30,000 fee introduced by Labour as a “flea bite” to wealthy non-doms.
However, Phil Berwick, director at McGrigors, said the “flea bite” had an impact, with the majority of non doms likely to have left for Switzerland, Monaco or the Channel Islands.
“It has still been sufficiently irritating to drive thousands of them overseas,” he said. “Unfortunately many of these high net worths will have taken the £30,000 annual levy as a message that the UK is not such a welcoming home to them. The spending power that has been lost to the UK economy is surely going to be far in excess of the income gained by the Treasury.”
About 5,400 people paid the £30,000 non-dom levy for the 2008/9 tax year, more than the 4,000 predicted by the Treasury prior to the tax’s introduction. This collected around £162m for the public purse, with £350m forecast for 2009/10.
In contrast, the Treasury estimated that non-doms pay around £4bn in income tax each year on top of the tax they pay on capital gains on UK assets, stamp duty and value added tax on spending, which brings the estimated total to £7bn.
David Kilshaw, a partner at accountants KPMG, said many non-doms had also been discouraged from coming to the UK. However, he added that more existing UK non-doms had accepted the charge than first anticipated. “We are not out of jail yet. If there are any more significant changes it will drive people off the edge,” he said. “At the moment things have stabilised, especially at the very senior executive level. People have decided that the UK and London has a lot going for it."
HMRC said the non-dom figures for 2008/09 were provisional and only included those non-doms with overseas earnings to declare.
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