Non-doms & IHT stats: the COVID-19 effect

HMRC's latest round of tax statistics shows the impact that the Cororonavirus pandemic and government policy on certain elements of taxation. Excess deaths due to COVID-19 have led to a record high in Inheritance Tax receipts whilst many Non-Domiciled individuals stayed outside of the UK and remitted less taxable income back.

Non-domiciled individuals

In 2022 there has been an increase in the number of Non-Domiciled 'Non-doms' taxpayers arriving in the UK. COVID-19-related travel restrictions depressed the statistics in 2020-21, and this had a knock-on effect in terms of the number of Non-doms using the remittance basis and/or paying the remittance basis charge.

• HMRC estimates that 78,700 individuals (68,300 in 2020-21, 76,500 in 2019-20) will have claimed Non-domicile status. 
• The number of UK-resident Non-doms taxpayers fell from 63,400 to 54,300.
• Some 10,100 Non-doms are Deemed UK domiciled in 2020-21.
• Overall, the number of Non-dom non-UK resident taxpayers has been gradually declining from 14,600 in the tax year ending 2018 to 13,600 in the tax year ending 2022.
• Non-doms taxpayers will have paid £12.4 billion in Income Tax, Capital Gains Tax (CGT) and National Insurance Contributions (£11.3 billion 2020-21 and £7.878bn in 2019-20).
• In 2021 just 500 Non-doms claimed Business Investment Relief which allowed them to bring some £739 million to invest in the UK

Inheritance Tax (IHT)

• IHT receipts in 2022-23 are expected to increase by 16% to £7.1bn (2021-22  £6.1bn).
• This is due to a combination of excess and early deaths caused by the COVID-19 pandemic, recent rises in asset values and the government’s decision in March 2021 to maintain the IHT nil rate band thresholds at their 2020 to 2021 levels up to and including 2025 to 2026

Other tax statistics indicate that inflation which started accelerating in 2022-23 is likely to break all previous tax receipts records.

Income tax and Capital Gains Tax

• Provisional receipts in 2022 to 2023 are £440.9 billion (2021-22 £393.9bn).

Business Taxes

• In 2022-2023 these are expected to be £84.9 billion (2021-22 £67.4bn)

Stamp Duty Land Tax (SDLT)

• Receipts have risen from £19.3 billion in 2022-23 (from £18.6bn in 2021-22)
• These are explained by a combination of increases in average property prices and the end of the SDLT holiday on 30 June 2021.

Useful guides on this topic

Non-domicile status, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?

Non-Domiciles Tax Toolkit
This toolkit provides an outline of the tax compliance issues for non-UK domiciled (non-dom) individuals.

Remittance basis (overseas income)
What is the remittance basis? Who can claim it and when? What are the advantages of claiming the remittance basis and how much is the remittance basis charge?

IHT: Transfers of value
What is a transfer of value for Inheritance Tax (IHT) purposes?

Client Briefing: Making gifts & IHT
What gifts can you make without triggering Inheritance Tax (IHT)? What are the rules on making tax-effective gifts for IHT purposes?

IHT: Estate planning checklist
This checklist covers some of the essential planning points that taxpayers should know when planning for their estate and Inheritance Tax (IHT).

External links

HMRC: Non-domiciled taxpayers in the UK

HMRC: Inheritance Tax statistics