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Ministers have been asked to “come clean” about the financial argument for the decision not to scrap the UK’s non-domiciled status, after the chancellor suggested he did not know how much money would be raised by launching the controversial tax scheme. Jeremy Hunt insisted the economy would not be helped by scrapping the controversial tax regime, saying on Friday he would prefer the super-rich to “stay … and spend their money here”. And he said he was told by Treasury officials that they were “very uncertain” about how much money the move would actually bring. Labor has now called on ministers to release figures on the number of non-doms in the UK and how much the Treasury is currently losing because of the window. The highly respected Institute of Fiscal Studies (IFS) think tank told the Independent that its “best estimate” was that scrapping the measure would be worth around £3 billion a year. The amount is around the same amount as Mr Hunt announced would be added to next year’s NHS budget. The Independent revealed earlier this year that Rishi Sunak’s wife Akshata Murty had a non-resident tax status while her husband was chancellor. Mr Sunak called the reports about his wife “unpleasant smears” at the time, although he eventually gave up the advantage. The issue was considered so toxic that insiders initially believed it would scupper Mr Sunak’s hopes of becoming prime minister. Non-dom status, which is legal, can save a person from paying UK tax on dividends from foreign investments, overseas property rental payments or bank interest. Asking the government to provide figures on non-homesteaders, shadow chief secretary to the Treasury Pat McFadden said: “As the Tories raise taxes on workers, it is not right that those at the top can benefit from the antiquated non-homestead tax privileges. If you make Britain your home, you should pay your taxes here.’ He said Labor would ensure “people who make the UK their home contribute to this country by paying tax on their worldwide income”. Labor also cited research produced by the London School of Economics which aligned with the figure suggested by the IFS, putting the amount the Treasury could raise by scrapping non-dom status at close to £3.2bn a year . Earlier this year, the IFS warned that there was “very little evidence on the effectiveness of the non-domestic scheme in attracting and retaining valuable people”. But Mr Hunt argued that removing the tax loophole, as Labor is proposing, would “damage the long-term attractiveness of the UK”. The chancellor has faced questions over his decision to keep the regime at the same time as planning tax rises and cuts to public services, which experts warned would hit middle income earners particularly hard. Mr Hunt said Treasury officials had not given him firm numbers on how much money would be raised by scrapping or restoring non-private status. “They told me they were very uncertain about the figures that came out, in terms of the economies,” he said. “Like me, they wanted to be very sure they weren’t doing things that hurt the UK’s attractiveness. These are foreigners who could easily live in Ireland, France, Portugal, Spain – they all have these programs. All things being equal, I’d rather they stay here and spend their money here.” Asked if the Treasury had given him a figure for how much scrapping the scheme would bring in, the chancellor said: “No, because we don’t agree with the figures given by Labour. The Treasury didn’t tell me they were going to help the economy do that. so I chose not to. “I am not going to do anything that will damage the long-term attractiveness of the UK, even though it gives easy shots to the opposition parties. I think it would be a mistake to do in terms of creating jobs in the UK.” Labor has pledged to scrap the offshore tax regime and replace it with a system similar to that in Germany and Canada, where temporary residents are allowed to avoid paying domestic tax on overseas income. Shadow chancellor Rachel Reeves accused Hunt of approving “tax-free income for millionaires while millions face frozen tax benefits and council tax rises”. In an apparent reference to Mr Sunak’s home, he added: “How can he claim this is fair? He refuses to act and I wonder why. Perhaps this was the only policy he could not sign off on from No 10 Downing Street. I say, if you make Britain your home, you should pay your taxes here.’ A Treasury spokesman pointed to Mr Hunt’s comments that removing the scheme would be “the wrong thing to do in terms of jobs and welfare for the UK”.
