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13 Mar 2013

Tax Break Becoming Less Attractive Option To The Super Rich

The number of people residing in Britain who apply for a tax deduction has declined to 116,000 in the tax year to April 2011 from 140,000 in 2007-2008, the period when the world started to recognise the first symptoms of the looming financial turmoil, a spokesman for the UK tax authority told Reuters earlier this week.

Tax breaks give people the chance to avoid some taxes on their income. Britain has been one of the destinations preferred by many of Europe´s wealthiest people due to the availability of a tax break which abolishes much of the taxes for non-domiciled individuals (non-doms), which is part of the government´s aim to encourage foreign investors to bring fresh money into the country´s economy.

According to tax expert Jason Collins of law firm Pinsent Masons, the UK has lost some of its appeal to the super rich as a result of the government´s practice of charging for the right to avail of the tax break, introduced in 2008. The decline could also be attributed to the 50% upper income tax rate two years later.

The lower number of people occupied in the financial sector and the general state of the economy are also factors that have a direct impact on non-doms´ willingness to apply for a tax break, the tax authority spokesman noted.

Despite this downward trend, the number of non-domiciled individuals taking advantage of the break is still higher when looking at the numbers recorded in the 1997/98 tax year, when just 83,000 sought to exclude part of their income from taxation.

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