Ed Miliband has announced that the non-domicile tax rule, which was first introduced by William Pitt the Younger in the late 18th century, would be abolished under a Labour Government.

However, in January 2015, Shadow Chancellor Ed Balls said that any move to completely abolish the non-dom rule “would end up costing Britain money”, which contradicts the party’s latest stance on the issue.

Non-doms are British residents and still pay tax on all their UK earnings; however, their permanent home is officially outside the UK, meaning that they are not required to pay taxes on overseas income as long as it is not transferred to Britain.

Currently, a charge of at least £30,000 is applied to those claiming non-dom status.

In the Autumn Statement, Chancellor George Osborne announced that a new £90,000 charge would be applied to non-doms that have lived in Britain for 17 of the past 20 years.

Some of Britain’s wealthiest permanent residents are non-doms and currently avoid paying UK tax on income gained from their overseas ventures.

However, if the rule is abolished altogether it could prove to be a big financial mistake for the UK economy.

Famous examples of those that have claimed non-dom status reportedly include Roman Abramovich – the Billionaire owner of Chelsea FC – Sir Gulam Noon (a key Labour supporter), and Lord Ashcroft, a Conservative supporter who relinquished his status in 2010.

UK domiciles have to pay tax on their total income and gains, regardless of where their money is made in the world.

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