The number of super-rich people who live in the UK but pay no tax on their offshore income has fallen by 11%, after the pandemic imposed severe travel restrictions, according to figures published by HMRC on Thursday. UK-based people with non-domicile tax status – so called “non-doms” – in the 2020-21 financial year totalled 68,300, a fall of 8,200 on the previous year. The number has been on a downward path since 2017, with tax experts also citing Brexit and tighter government controls on who can claim the tax break. Controversy over non-dom status exploded from being a niche issue among tax experts to wide public debate this year after it was revealed that the wife of the prime ministerial candidate Rishi Sunak was using the status to avoid an estimated £4.5m in tax on dividends she collected from her billionaire father’s IT business. Following widespread outrage, Sunak’s wife, Akshata Murty, said she would pay UK taxes on all income going forward as her tax arrangements were not “compatible with my husband’s [then] job as chancellor”, adding that she appreciated the “British sense of fairness”. However, Murty has retained her non-dom status, which could in the future allow her family to legally avoid an inheritance tax bill of more than £275m. HMRC pointed to Britain’s isolation during successive lockdowns as a reason for the fall in non-doms. “We see that the primary driver of this is fewer new non-domiciled taxpayers coming to the UK to replace those who normally leave,” it said. “This is coincident with the travel restrictions caused by the Covid-19 pandemic that led to a substantial reduction in international aviation, sea and rail travel options to the UK.” Despite the fall in the number of non-doms, the amount collected from them in UK taxes and national insurance stayed roughly flat at £7.9bn. In the 2016-17 tax year they collectively paid £9.5bn in tax. HMRC said the fall in numbers was also driven by residents choosing to change their status to be UK-domiciled after the government introduced an annual “non-dom levy” of between £30,000 and £60,000. The levy, as of April 2017, allows non-doms to continue to pay no tax on offshore income and capital gains unless they bring the money to the UK. Advertisement “Following a change in policy in April 2017 to remove permanent non-domiciled status, we estimate that there are at least 10,100 individuals claiming deemed domiciled taxpayer status in the UK on their [self-assessment] tax returns in the tax year ending 2021,” HMRC said. “These are individuals that were formerly treated as non-domiciled for UK tax purposes prior to the 2017 policy.” However, there were almost 100,000 non-doms in 2016, which suggests that 20,000 people have chosen to leave the UK and take their millions or billions to a different tax jurisdiction. Tax experts said the drop in non-doms also reflected the growing number of wealthy people leaving the UK because of Brexit. The vast majority of non-doms are foreign people living in the UK who use the status to be only taxed on income and capital gains arising in the UK, but not on income and gains generated overseas. Most ordinary people living and working in the UK pay tax on income and capital gains arising both here and abroad. Famous non-doms have included the steel magnate Lakshmi Mittal, the media baron Viscount Rothermere and the oligarch and former owner of Chelsea football club Roman Abramovich. London had the largest number of non-doms, with 58% of all people with the tax classification living in the capital. The London-based non-doms accounted for 72% of income tax, capital gains tax and national insurance contributions paid by non-doms, in a further reflection of the concentration of the country’s rich people in the capital. Arun Advani, an associate professor at University of Warwick, said: “This is a reminder that while the non-dom regime is alien to most people, use of this tax break is common among the wealthiest. The latest figures show use of this tax perk has continued to remain high, continuing to cost the Treasury money during a cost of living crisis.”