Labour government would abolish non-dom status, John McDonnell announces

Shadow chancellor says party would also give 2.5 million people interest-free loans for electric vehicles

A Labour government would abolish non-dom status in its first Budget, John McDonnell has announced on the eve of the party’s annual conference.

The shadow chancellor said scrapping the “spurious scam” would be part of moves to “establish a fair taxation system”.

The current system “offended ordinary people” and deprived public services of funding, he said.

Up to 80,000 people who live in the UK but were born abroad or have foreign-born parents currently have non-dom status, which affords them generous tax benefits.

Mr McDonnell told The Times: “People of all levels of income are going to work and they pay their taxes. And people may not be overjoyed about paying taxes but they know what it goes for – public services – and some people are proud of the contribution that they make.

“Why should the super-rich get away with it on a spurious scam like this?”

The non-dom system was introduced more than 200 years ago and allows people with the status to avoid paying tax on income or capitals gains made outside the UK.

Tory chancellor George Osborne tightened rules on non-doms but Mr McDonnell said there were still “a large number of people out there ... not paying taxes that everyone else pays”.

Former Labour leader Ed Miliband vowed to abolish non-dom status in 2015 but the pledge was not included in the party’s 2017 manifesto.

As Labour’s annual conference gets underway in Brighton, Mr McDonnell also promised that a government led by Jeremy Corbyn would give 2.5 million people interest-free government loans to buy electric cars.

Under the plans, 500,000 loans would be available each year for five years.

The maximum loan would be £33,000 in the first year, although this would drop as the cost of electric vehicles decreases. The government would cover the cost of the interest, which Labour said would be up to £1,500.

The Scottish government is already operating a similar policy on a smaller scale.

Mr McDonnell said: “This will stimulate the automotive industry, it will sustain jobs in the conversion from fossil fuels to electric but actually it will create new jobs as well.

“So this is beneficial in terms of the climate, it is beneficial for those people who want to convert their carbon-fuel powered car into an electric vehicle that is sustainable.

“At same time it will help support the automotive industry and create jobs. Those jobs are in areas where we have had real issues, particularly with Brexit.”