A first-of-its-kind study found that one in five bankers uses special status to cut foreign income tax in the UK.
The absence of taxes allows individuals to avoid paying the British tax on money received from foreign investment or rent for foreign real estate. It also means that only UK assets are eligible for inheritance tax. Those who use it still have to pay income tax in the UK.
The report came after a separate investigation The Independent revealed that the Chancellor’s wife, Akshata Murtie, is using non-family tax status to reduce the tax bill on foreign income in the UK.
It is not necessary to use non-home status to minimize the British tax, according to HMRC guidance. The study found that very wealthy people are “much more likely” to enjoy status than low-income people.
Ordinary taxpayers do not have access to status without citizenship. This allows those who use it to live in the UK full time and for several years before graduation.
There are no official statistics on the costs or benefits to the UK public wallet from the policy of granting status to certain individuals, but around 70,000 people have declared status in 2018.
Four out of ten people who earned £ 5 million and more in 2018 at some point declared non-home status, researchers from the London School of Economics and the University of Warwick found out after being given access to a decade of anonymous HMRC data.
Andy Summers, an associate professor at the LSE, said: “Regimes that do not have the right to citizenship are mostly enjoyed by the very rich, who receive tax benefits that are not available to ordinary taxpayers. This distribution could cost the Treasury significant revenue and deserves closer attention at a time when everyone else is facing tax increases. ”
The changes, introduced in 2017, limited family-free benefits to those born in the UK or living there for 15 years. The main factor that determines whether a person is eligible for status is usually the place where the person’s father lived when he or she was born.
One in ten residents of some of the most expensive areas of London, Westminster and Kensington, enjoyed non-proprietary status at some point between 1997 and 2018.
The study found that geographical connections for non-homes are widespread. About one in seven is from India, and a similar number is from the US, and the rest are mostly from Western Europe or English-speaking countries such as Australia. The fastest growth is the use of special tax status by people from China or the former Soviet Union.
The study also found clusters of non-homes in areas such as South Kensington in London, near the French Consulate and South Aberdeen, near oil industry centers. Sports players also use status around Manchester.
Arun Adwani, an associate professor at the University of Warwick, said: “While most people obviously have no idea about the no-property regime, I think the biggest shock may be bankers and others working in the city when they realize how much their colleagues are getting benefit from a tax regime to which they do not have access ”.
The study shows that every fifth banker enjoys the status of tax savings without profit
Source link The study shows that every fifth banker enjoys the status of tax savings without profit