Official Statistics

Statistical commentary on non-domiciled taxpayers in the UK

Updated 28 July 2022

1. Summary of key statistics

The key findings from this year’s publication are:

• In the tax year ending 2021, we estimate that there were 68,300 individuals claiming non-domiciled taxpayer status in the UK on their Self Assessment (SA) tax returns, down from 76,500 in the previous year. We see that the primary driver of this is fewer new non-domiciled taxpayers coming to the UK to replace those who normally leave. This is coincident with the travel restrictions caused by the COVID-19 pandemic that led to a substantial reduction in international aviation, sea and rail travel options to the UK.

• We estimate that non-domiciled taxpayers are liable to pay £7,896 million in UK Income Tax, Capital Gains Tax (CGT) and National Insurance contributions (NICs) in the tax year ending 2021. Despite the lower number of non-domiciled taxpayers their aggregate tax and NICs liabilities remain broadly similar to the previous year’s figure of £7,878 million.

• Following a change in policy in April 2017 to remove permanent non-domiciled status, we estimate that there are at least 10,100 individuals claiming deemed domiciled taxpayer status in the UK on their SA tax returns in the tax year ending 2021. These are individuals that were formerly treated as non-domiciled for UK tax purposes prior to the 2017 policy change.

• We estimate that in the tax year ending 2021, the amount of UK Income Tax, Capital Gains Tax and National Insurance contributions liable by those taxpayers claiming deemed domicile status was at least £3,414 million. This figure substantially exceeds the decrease in liabilities for those remaining non-domiciled taxpayers of around £2,000 million between tax year ending 2017 and tax year ending 2018.

Figure 1: Non-domiciled taxpayer numbers, Income Tax, Capital Gains Tax and National Insurance contributions

2. About this release

This publication is the annual update of statistics on individuals who are non-domiciled for tax purposes. To qualify as a non-domiciled taxpayer an individual must have their permanent home, their ‘domicile’, outside the UK. They must also claim non-domiciled status in the UK for tax purposes on their UK SA tax returns. Figures for tax years ending 2019, 2020 and 2021 are provisional, all other figures are final.

From 6 April 2020, individuals, trustees and personal representatives of deceased persons who sell or otherwise dispose of UK residential property where Capital Gains Tax (CGT) is due on all or part of the gain have had to report the disposal to HMRC within 30 days of completing the disposal, and at the same time make a payment on account of the CGT due. These statistics currently do not include tax liabilities reported using the new Capital Gains Tax on UK property service for tax year ending 2021. We aim to include this within the next release.

3. Non-domiciled taxpayers and taxes

Figure 2: Number of non-domiciled taxpayers who have arrived into the UK in the previous five tax years

We estimate that there were 68,300 individuals claiming non-domiciled taxpayer status in the UK on their SA tax returns in the tax year ending 2021. This is down from 76,500 in the tax year ending 2020, but is a smaller decrease than that seen between the tax year ending in 2016 and the tax year ending in 2017 or between the tax year ending in 2017 and the tax year ending in 2018.

Figure 2 shows that for the tax years prior to the year ending 2021 most non-domiciled taxpayers are UK resident for five or fewer years. The figure demonstrates that those departing from one year to the next are normally replaced by new non-domiciled taxpayers coming to the UK. However, in the tax year ending 2021 there were around 6,000 fewer new arrivals compared to the tax year ending 2020. We also see more than 3,000 fewer people stay for a second year than in recent years. We conclude that the decrease in non-domiciled taxpayers is primarily due to the reduction of new arrivals into the UK. We believe this is likely to be explained by the COVID-19 related travel restrictions that led to a substantial reduction in the availability of aviation, sea or rail travel into the UK for much of the tax year ending 2021.

Consequentially we would not expect to see similar effects in the future unless a similar situation were to occur. We may expect the effect of this to contribute toward lower numbers of non-domiciled taxpayers for the next four to five years as the size of the year 1 group is between the size of the year 4 and 5 groups.The reduced number of first year arrivals this year will mean fewer taxpayers in the one to five year range for each of the next five years, unless we see a larger than normal number of arrivals in upcoming years.

We estimate that in the tax year ending 2021, the amount of UK Income Tax, Capital Gains Tax and National Insurance contributions liable by all non-domiciled taxpayers was £7,896 million. Despite the lower number of non-domiciled taxpayers their tax and NICs liabilities remain broadly similar to last year’s estimate of £7,878 million. Overall, of all non-domiciled taxpayers in the tax year ending 2021, the majority claimed UK residence as in previous years.

The following section suggests the fall in non-domiciled taxpayer numbers in the tax year ending 2018 is largely explained by the deemed domicile reforms introduced in April 2017 (labelled in figure 3 as tax year ending 2018). This meant that an individual who was formerly non-domiciled might be deemed domiciled for tax purposes if they were born in the UK and have a UK domicile of origin (Condition A), or if they were resident in the UK for at least 15 of the 20 tax years immediately before the relevant tax year (Condition B).

4. Deemed domicile reforms

Figure 3: Deemed domiciled taxpayer numbers, Income Tax, Capital Gains Tax and National Insurance contributions

Figure 3 shows 10,100 individuals claiming deemed domiciled taxpayer status in the UK on their SA tax returns in the tax year ending 2021. This is broadly consistent with that in the tax year ending 2020, following two years of consistent increases. We have applied a late filing correction to the data for tax year ending 2021. This is consistent with our normal approach to publishing non-domicile figures for the current tax year as we are aware that late filing of tax returns does take place.

We believe that there are likely to be a larger number of deemed domiciled taxpayers than this as there are different incentives for the different deemed domicile groups. Those under condition A who have a UK domicile of origin do not have access to the range of transitional protections that were available for condition B deemed domiciles who do not have a UK domicile of origin. This means that only the condition B deemed domicile group has a strong incentive to tell us they consider themselves to be deemed and to continue to complete the SA109 form. This is to remind us that they consider themselves to be maintaining a common law non-domicile status despite having been deemed to be UK domiciled in the UK tax system.

We estimate that in the tax year ending 2021, the amount of UK Income Tax, Capital Gains Tax and National Insurance contributions liable by those taxpayers claiming deemed domicile status was £3,414 million. This is an increase from last year’s estimate of £3,096 million. These figures substantially exceed the decrease in liabilities of around £2,000 million between tax year ending 2017 and tax year ending 2018 of those not deemed shown in Figure 1.

So, this analysis shows that decreases in the number of non-domiciled taxpayers and tax liabilities in tax year ending 2018 can be substantially explained by taxpayers becoming deemed domiciled in the UK. This analysis suggests there may not have been a fall in revenue to the exchequer as a result of the reforms, with those becoming deemed domiciled continuing to pay tax in the UK, and the tax received may have offset any effects of some of that group leaving the UK and no longer paying UK tax.

5. Guidance for interpretation of figures in this release

We have provided provisional figures for the tax year ending 2021 for Tables 1 to 4 only (in the accompanying spreadsheet). Figures for tax year ending 2021 may be revised in the future and the difference between them and previous years may be reduced, or disappear. Further breakdown of the figures for the current year are not included as the source data is not complete enough to be a reliable indicator of trends (due to the level of similarity between two successive years of data) and will be included in next year’s publication. For the rest of this publication, we will discuss tax years up to tax year ending 2020.

6. Non-domiciled UK resident taxpayers, remittance basis and arising basis

The vast majority of non-domiciled taxpayers are UK resident. For the tax year ending 2020, in Figure 4, the number of UK-resident non-domiciled taxpayers fell from 65,400 to 62,900, compared with a fall from 79,500 to 76,500 for all non-domiciled taxpayers. The UK resident non-domiciled group is taxed on two bases: a remittance basis or an arising basis.

Individuals who are UK resident are normally taxed on the arising basis of taxation, so that all of that individual’s worldwide income and gains are taxable in the UK as they arise. Some non-domiciled taxpayers who are UK resident may choose to be taxed on the remittance basis, meaning that any foreign income and gains will be taxed if they are brought, or remitted, into the UK, even if that remittance occurs in a later tax year.

Those taxed on a remittance basis make up a larger proportion of non-domiciled UK residents. Figure 4 also shows that the number of taxpayers on both the arising and remittance basis have been broadly stable since the tax year ending 2018. This is another element that suggests stablisation of the impact of the April 2017 policy change to introduce deemed domicile status.

Figure 4: Number of non-domiciled UK residents claiming the remittance basis or the arising basis of taxation

In Figure 5, non-domiciled UK resident taxpayers claiming the remittance basis of taxation on their SA tax return were liable to pay more, on average, in every tax year than those claiming the arising basis of taxation on their SA tax return.

Please note Tables 5 to 6 will not include some individuals who pay tax on the arising basis without claiming non-domiciled or deemed domiciled status on the SA return, in particular taxpayers who were considered non-domiciled, but are now deemed to be domiciled and have moved onto the arising basis. The number of taxpayers on the arising basis and their taxes and NICs liabilities have also fallen in recent years, but may have stabilised.

Figure 5: Total UK Income Tax, Capital Gains Tax and National Insurance contributions to be paid by non-domiciled taxpayers on the remittance basis of taxation and by non-domiciled taxpayers on the arising basis of taxation

7. Remittance basis and the remittance basis charge

7.1 Population changes

Figure 6 shows how the fall in tax in the tax year ending 2018 of the total number of non-domiciled UK resident taxpayers is reflected in a fall in the number of individuals liable for the remittance basis charge (RBC), and the total tax amount to be paid by those individuals at that point.

Tables 7 and 8 show that a majority of the taxpayers who are using the remittance basis are not paying the RBC. This is because the RBC is only levied when a remittance basis user has been UK resident for at least 7 of the previous 9 tax years immediately before the relevant tax year. It is also not payable where a taxpayer using the remittance basis has less than £2,000 of unremitted non-UK income or gains. We have provided a breakdown for this group in Table 9.

7.2 Remittance basis claimants and taxes

Figure 6: Number of non-domiciled UK resident taxpayers taxed on the remittance basis and their Income Tax, Capital Gains Tax and National Insurance contributions

Non-domiciled taxpayers on the remittance basis in the tax year ending 2020 are liable to pay £6,352 million in Income Tax, Capital Gains Tax and National Insurance contributions. This is a decrease from 2019 and remains below the high point in the tax year ending 2017. We explained earlier in this release that tax and National Insurance liabilities from deemed domicile taxpayers exceed the decrease in remittance basis user liabilities that followed the tax year ending 2017.

The number of non-domiciled taxpayers paying on the remittance basis was 44,400 in the tax year ending 2020. We expect to revise this in future years due to a small number of late filers.

Figure 7 shows that the number of taxpayers who are using the remittance basis and have less than £2,000 unremitted income and gains has been decreasing consistently since the tax year ending 2017. However, the extent of the decrease in numbers has reduced since the tax year ending 2018.

Figure 7: Non-domiciled UK resident taxpayers taxed on the remittance basis not liable to pay a remittance basis charge because of unremitted income and gains below £2,000

8. Remittance basis charge revenue

Figure 8: Non-domiciled UK resident taxpayers liable to pay the remittance basis charge and UK Income Tax, Capital Gains Tax, National Insurance contributions and remittance basis charge revenue

Figure 8 shows the number of taxpayers who were liable to pay RBC rose from 1,900 in the tax year ending 2019 to 2,000 in the tax year ending 2020, which is further explored in the section below alongside Figure 9. The total amount to be paid by taxpayers in Income Tax, CGT, NICs and the RBC also rose from £925 million from those who were liable to pay the RBC in the tax year ending 2019 to £987 million from those who were liable to pay the RBC in the tax year ending 2020.

8.1 Remittance basis charge revenue and numbers

Figure 9 shows the change over time in the number of non-domiciled taxpayers liable to pay the RBC, grouped by the amount of the charge in a particular tax year, and the amount of revenue generated by the RBC.

In April 2012 and April 2015 there were two separate changes to the RBC regime, followed by a change in April 2017 to deem individuals as domiciled when either of the two conditions were met. Earlier in this release we outlined that there were at least 8,500 deemed domicile taxpayers in the tax year ending 2018 which explains the decrease in the number of individuals paying the RBC.

The accompanying background quality review provides more details on the remittance basis charge and deemed domiciled changes.

Figure 9: Break down of non-domiciled taxpayers that pay the remittance basis charge by charge amount

9. Non-domiciled taxpayers by region

9.1 Regional observations

London had the largest non-domiciled taxpayer population in the tax year ending 2020, with 58% of non-domiciled taxpayers in the UK located in that region and 72% of UK Income Tax, CGT and NICs coming from that region. London also had the largest population of UK resident non-domiciled taxpayers, and the largest population of non-domiciled taxpayers on the remittance basis.

10. Business Investment Relief in the UK

Figure 10: Value of business investment relief and number of claimants

Figure 10 shows that in the tax year ending 2020, the cumulative value of investments in UK businesses on which Business Investment Relief (BIR) has been claimed since BIR began in 2012, is £6,300 million. In the tax year ending 2020 alone, £853 million was invested in the UK from 500 taxpayers.