Liberal Democrats urge government to close ‘non-dom’ spouse loophole

The Liberal Democrats have said that Rishi Sunak must ban government members’ partners from claiming non-domicile status.

Currently Ministers are not allowed to hold non-dom tax status, but this rule does not apply to their immediate family. The Liberal Democrats have called on the government to close this loophole, arguing that it “leaves the door open for government ministers to exploit non-dom arrangements.”

However, they say new rules should include reliefs for cases where Ministers’ partners are nationals of countries that don’t have a double taxation agreement with the UK and have particularly inflexible tax rules.

Non-domiciled status is granted to those whose permanent home, or domicile, is outside of the UK. While they must pay UK tax on UK earnings, they do not need to pay normal UK tax on foreign income or gains. Instead they are only liable for an annual charge known as a “remittance charge” if they have lived here for several years.

The calls come after it was revealed that the chancellor’s wife does not have to pay UK income tax on income made abroad. This was discovered on the same day national insurance contributions increased by 1.25 per cent.

Liberal Democrat treasury spokesperson Christine Jardine MP said: “Government ministers have a duty to do what’s morally right. When they change peoples’ taxes, they and their immediate families should play by the same rules as everybody else.

“The chancellor’s household should be no different to the millions of UK households who now face the highest tax burden in decades. It’s just nonsensical that someone can be domiciled in a different country to the person they live with.

“Rishi Sunak must put what’s right above his own personal and selfish interests. He must take immediate action to close this loophole which leaves the door open for government ministers to exploit non-dom arrangements.

“And he must come clean on his family’s tax affairs while he’s at it. It would be a scandal if his household were to have benefitted from overseas tax havens.”