Britons 'should pay UK tax wherever they live in the world'
CISI proposes radical shake-up to block tax-dodging and make system fairer
Britons should pay full UK tax regardless of where in the world they live, the Chartered Institute for Securities and Investment (CISI) has said.
The idea would block tax-dodging and make the system fairer, it added, mirroring the US system where all citizens pay tax at home on their worldwide income, no matter their location.
People in the UK only pay taxes on income "enjoyed" here, meaning money received and held offshore is not touched. By maintaining a domicile outside the UK, it is possible to reduce their tax bill.
As with the US system, income tax paid elsewhere would be deducted from owed UK duties to avoid double taxation. If this amount is less than the amount that would have been paid at home, a top-up payment to HMRC would be made.
"The super-rich would be prevented from moving abroad to cut their bill, while those who remain in the UK would be spared an ever-mounting tax charge," says the Daily Telegraph.
CISI chief executive Simon Culhane said: "If [the highly paid] want the benefits and rights of UK citizenship, they must accept their responsibilities to pay their fair dues and contribute to the UK Exchequer."
The moves would be popular with inequality campaigners, while protecting higher earners who are fully resident in the UK and who, under progressive reforms to tax bands in recent years, have been losing an ever larger sum of their earnings.
"The UK income tax system isn’t fair at the best of times," added Culhane. "The top one per cent of taxpayers, roughly those who have an income over £150,000, pay almost 30 per cent of the entire income tax burden of £160bn, while the average person pays less than £5,000 a year.
"We could greatly simplify the collection of UK tax, and spread the load more fairly, if we moved away from just operating a residence test when determining whether an individual should pay tax."