Farage’s Plan to Let People Pay to Avoid Tax

Farage wants to let non-doms pay a whopping £250,000 to get out of paying a lot of tax. Why, you ask? Well, that is a great question.

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A Britannia Card. It costs £250,000 and gets you out of paying tax on any money you make outside of the UK, and exempts you from inheritance tax1.

To you and me, that may sound like a terrible deal - £250,000 is a lot more than we’d normally pay in tax. But unless you’re incredibly rich, this isn’t for you. This is for the people who pay hundreds of thousands of pounds in tax each year. They could cut that right down.

But don’t worry, this card could actually benefit you. Farage wants to be a modern-day Robin Hood, and give all of the money from this card directly to the lowest-paid workers.

This means, according to Reform, that each low-paid worker would receive anywhere from £600 to £1,000 as a tax-free annual dividend.

It’s for non-doms. A person who lives in the UK, but claims their permanent home is somewhere else.

If they bought this card, they would only have to pay tax on what they make in the UK, as well as any other money that they bring into the UK.

Currently, the system is based on residency, rather than domicile. As a result, under the current system, anyone who has been a UK resident for less than four years does not have to pay tax on money made abroad. However, they lose this status automatically after four years2.

The previous system, however, was quite different - and a lot more similar to Farage’s scheme. You used to have to claim non-dom status, which would exempt you from paying tax on money made abroad, unless it was brought into the UK. However, if you’ve lived in the UK for seven of the last nine years, you had to pay £30,000 to keep non-dom status. If this were 12 of the last 14 years, you had to pay £60,000, and if it was 15 of the last 20 years, you lost non-dom status automatically3.

Farage argues that the current system is leading the rich to leave the country in favour of countries with lower taxes. Therefore, the Britannica Card is meant to keep them here.

Well, that depends on your aim. If you want the wealthy to pay less tax - yes (sort of). If you want to help lower-paid workers - no.

Dan Neidle, founder of Tax Policy Associates, believes the Britannia Card would result in a staggering £34 billion in lost tax revenue over just five years4.

Niedle also pointed out that Reform would only give the money to the lowest-paid workers, so those who are unemployed - including those who may be unable to work due to a disability or illness - would not get a penny.

Furthermore, people who could buy the card, but were planning on staying in the UK and paying tax, would just buy the card. This would result in a lot of lost tax, and would have no other benefits, as they were never planning on leaving5.

This is the first ‘deep dive’ post I have done, so I hope you found it useful. If you enjoyed it and know someone else who might, please share it with them - I’d greatly appreciate it!

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