Rachel Reeves is to water down her crackdown on the non-dom tax standing after evaluation confirmed it had prompted an exodus of millionaires.
The chancellor stated she could be tabling an modification to the plans after “listening to the concerns” of non-domiciled residents.
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The announcement was welcomed by tax advisers – however one skilled instructed Sky Information that the federal government ought to go additional and make it simpler for rich folks to maneuver to the UK, particularly in gentle of the Trump presidency.
“Non-dom” standing permits somebody who lives within the UK to keep away from paying tax on cash made overseas as a result of their everlasting dwelling is taken into account exterior of the nation.
Labour’s manifesto vowed to abolish the standing to “address unfairness in the tax system” and lift funds for public companies.
The deliberate modifications relate to guidelines governing the “temporary repatriation facility” – a transition window which can enable non-doms to deliver abroad earnings into the UK and pay a lowered tax fee.
The association was as a result of final for 3 years from April 2025, as introduced within the October funds.
Nevertheless, talking on the World Financial Discussion board in Davos, Ms Reeves stated she could be making this extra beneficiant.
She instructed the Wall Road Journal: “We’ve got been listening to the issues which were raised by the non-dom neighborhood.
“And in the finance bill, we will be tabling an amendment which makes more generous the temporary repatriation facility, which enables non-doms to bring money into the UK without paying significant taxes.”
Ms Reeves prolonged the two-year transition window that the Conservative authorities had deliberate to a few years in her funds again in October.
‘Millionaire exodus’
The brand new extension comes after analysts discovered over 10,000 millionaires left the UK in 2024, a 157% improve on 2023 – that means the UK misplaced extra rich residents than every other nation besides China.
The analysis, carried out by international analytics agency New World Well being and funding migration advisers Henley & Companions, reveals the UK grew to become a internet outflow nation of millionaires after the Brexit vote in 2016, however the massive haemorrhage occurred final yr.
Up till 2016, the UK had all the time been a internet influx nation when it got here to high-net-worth people.
Peter Ferrigno, group tax director at Henley & Companions, instructed Sky Information as we speak’s announcement reveals the federal government had listened to warnings that “people can leave and will leave if they feel like they are being unfairly treated”.
Nevertheless, whereas welcoming the modifications, he stated there must be “joined up thinking with migration rules” so it’s simpler for millionaires to return right here and contribute to the economic system.
He stated millionaires had been “leaving anyway” due to Brexit and the “perception that things weren’t working” – however Donald Trump’s presidency within the US is an opportunity to draw some again.
‘Skewered priorities’
Controversy over non-doms erupted in 2022 when it emerged Rishi Sunak’s spouse Akshata Murty, the daughter of an Indian billionaire, had the tax standing.
Pic: No 10 Downing Road
After the row she stated she would begin paying taxes on her abroad earnings as she didn’t need to be a “distraction” from her husband – then the prime minister.
Labour repeatedly used the difficulty to assault the Tories whereas in opposition, and scrapping the standing was a centrepiece of their election marketing campaign, promising to make use of the £1bn a yr proceeds to fund NHS and dental appointments, and college breakfast golf equipment.
Downing Road stated the transfer doesn’t “change the overall approach” to the federal government’s coverage, which is to switch non-doms with “a new internationally competitive resident-based system”.
However Carla Denyer, co-leader of the Inexperienced Occasion, accused the federal government of “totally skewed priorities” after it refused to row again down on its lower to winter gas funds.
And the Tories stated that Labour’s funds was “falling apart in front of our eyes”, with Ms Reeves “forced to admit” her plans to boost cash “make the UK less attractive”.
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A Treasury spokesperson stated: “Whereas we don’t count on these modifications to influence the £33.8bn of tax income that the OBR forecast to boost over 5 years, they replicate our continued engagement with stakeholders to ensure the reforms introduced at funds function as supposed.
“The temporary repatriation facility is designed to encourage non-doms to bring their funds to the UK, encouraging them to spend and invest this money here.”
