Rachel Reeves amends planned changes to tax rules for non-doms, addressing concerns over mass departure of wealthy individuals from the UK.
Chancellor Rachel Reeves has announced a revision of the government’s controversial tax overhaul for non-domiciled individuals, following a significant departure of millionaires from the UK. This decision comes after concerns were raised about the impact of the tax changes, which were first introduced in the October Budget.
Reeves, speaking at the World Economic Forum in Davos, confirmed that an amendment to the finance bill would be tabled to address some of the issues raised by the non-dom community. The government will expand the temporary repatriation facility, which allows non-doms to bring income and capital gains into the UK with minimal tax liabilities.
Reeves also sought to ease concerns that non-doms could be subject to double taxation, particularly in countries with double taxation agreements with the UK, like India. She reassured the public: “We are not changing any double-taxation conventions, and non-doms need not fear being drawn into paying inheritance tax.”
A source within the Treasury stated, “We are always open to ideas on making our tax system more attractive to entrepreneurs and business leaders, which in turn supports job creation and wealth generation in the UK.”
The non-dom tax loophole, which allows foreign nationals living in Britain to avoid paying tax on overseas income, was thrust into the spotlight by the case of Akshata Murty, wife of Prime Minister Rishi Sunak. Murty, whose family business is valued at around £60bn, used the non-dom status but later announced she would forgo it to avoid drawing attention to her tax affairs.
Since the Labour government came to power in July, the UK has seen a dramatic exodus of the wealthiest individuals. Last year, 10,800 millionaires left the country, marking a 157% increase from 2023. The majority sought new homes in countries such as Italy, Switzerland, and the United Arab Emirates, further highlighting the growing concerns about the UK’s tax regime.
The Adam Smith Institute (ASI) pointed out that the tax contribution of the millionaires leaving the UK was substantial, with each individual potentially paying £393,957 in income tax annually. The think tank warned that the departure of such high earners could have a significant negative impact on the country’s finances.
As Reeves adjusts her policy, it remains to be seen whether these changes will stem the flow of wealthy individuals out of the UK and restore confidence among business leaders and entrepreneurs. The Treasury has yet to comment on the matter.
