Budget 2011: Osborne goes easy on non-doms

George Osborne's Budget was better-than-expected for non-doms as many will have feared far harsher tax increases, KPMG says.

Osborne says the moves announced today will raise more than £200m for the public purse, but they fall short of expectations.

The Chancellor has increased the existing annual charge for non-doms who have lived in the UK for 12 years or more to £50,000, up from £30,000.

However, early forecasts had expected the charge to rise to as much as £100,000.

Those who have been resident for seven years and up to the eleven year limit will see no rise at all. 

In addition, non-doms who use the income they bring into the UK to invest in British businesses will be exempt from paying a £30,000 annual charge on top of the normal rate of income tax, he said.

Daniel Crowther, director at KPMG, says: "The increased annual rate for those who have been here for 12 years or more will be a real cost for individuals to meet.

"But simplification and the ability to bring money in to invest in UK businesses is a really positive step which will allow non-doms to continue to help grow the UK economy."

Osborne today pledged not to tinket further with the taxation of non-doms ‘for the remainder of this Parliament.'

He also repeated an earlier coalition government pledge to make "those with the broadest shoulders bear the greatest burden" in rebuilding Britain's economy.

However many have called for the non-dom rules, and the benefits they can bring to some, to be radically overhauled.

The changes announced by the Government today will not come into effect until April 2012 and will be the outcome of consultation that will commence in June 2011.

Estimates suggest billions of pounds are lost each year to HMRC under the current arrangement, based on figures suggesting up to seven million people qualify to claim and only a tiny proportion put it on a tax return.

In 2008/9 there were 123,000 non-doms in the UK who contributed a total of £5.9bn in tax.