Everything You Need To Know About Non-Doms

Who are the non-doms, what tax do they avoid and who introduced these rules anyway? Here is all you need to know.

:: What is non-dom status?

Non-domiciled status can be claimed where you are living in the UK but your father or grandfather was resident in another country when you were born. (Grandfather because non-dom status can be inherited).

It means you do not have to pay UK tax on money earned outside the UK.

:: What if my mother or grandmother were resident outside the UK when I was born?

Tough luck, you do not qualify. The rules are a bit sexist like that.

:: Rules or law?

Actually non-dom status is a tax rule. It was introduced by William Pitt the Younger in 1799 - along with income tax.

The caveat was included as an allowance for ships bringing goods back from the colonies.

:: How many non-doms are there?

Around 116,000. They tend to be very rich.

Among them are HSBC boss Stuart Gulliver and steel magnate Lakshmi Mittal.

Conservative peer Lord Ashcroft gave up his non-dom status in 2010 so he could remain in the House of Lords.

:: And does it effectively turn the UK into a tax haven for the rich as Labour is claiming?

Yes, and no. People may still have to pay tax in the country where they are earning cash.

That said, leaked files earlier this year showed some were paying no tax anywhere in the world by using Swiss bank accounts at the suggestion of HSBC.

:: So do non-doms get away without paying anything in the UK?

They did - but now they only do for seven years. In 2008 Labour tightened the rules.

Those who have lived in the UK for seven years had to pay an annual fee of £30,000 if they wanted to keep their non-dom status.

George Osborne tightened it further still in the Autumn Statement - increasing the fee for those living in the UK for 17 years to £90,000.

:: For really rich people that annual fee still seems a pretty good deal

It has been said. One non-dom told Sky's Political Editor Faisal Islam that the Chancellor could raise the annual fee to £250,000 and it would still be worth him staying in the UK.

:: And Labour is going to abolish non-dom status?

That is what Ed Miliband has said. It's part of his "broadest shoulders bearing the heaviest burden" approach.

However, the Conservatives point out that technically it is more small adjustments on how long people can be non-dom.

The full details of Labour's plans are as yet unclear, but it will allow only "real temporary residents" to take advantage of the tax benefits.

:: If non-doms had to pay UK tax how much would the country get?

Hundreds of millions according to Labour.

:: Then what are the drawbacks?

The UK could lose hundreds of millions, according to the Tories.

There is a fear if the very rich had to pay tax at the same level the rest of the population do then there would be a "flight of cash and talent", ie they would leave the UK and take the investment, fees they do pay, money they donate to the arts and charities with them.

This could be more costly in the long run. In the 13 years it was in power Labour did review non-dom status and decided not to scrap it.

:: Would the rich really move out lock, stock and barrel?

Just as a number of people cry flight, many also point out that London as a financial capital is a significant draw to the very wealthy and the attractions of that would not be wiped out by paying tax - although it is broadly accepted there would be some departures.

The Financial Times has spoken in support of scrapping the status.

Dragon's Den star Duncan Bannatyne, who last week signed up to a letter supporting the Tories on corporation tax, is in favour of the move.

:: Any other issues?

As Sky's Economics Editor Ed Conway points out: "If Labour do scrap non-dom status & bring in a mansion tax, one can only imagine the scale of collapse of the prime London property market."

:: And are all party members on the same page with this?

There is some confusion.

Tory Education Secretary Nicky Morgan said in interview that the Tories wanted those based in the UK to pay tax on all their earnings - even those from abroad. Although this has not been the Conservative standpoint.

Meanwhile, an interview with shadow chancellor Ed Balls has been unearthed in which he says the UK could not afford to scrap non-dom status.

:: What do other countries do?

The UK deal is very generous but others, including Belgium and the Netherlands, have similar rules.