Rachel Reeves to facilitate non-dom tax reforms in the UK

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Rachel Reeves is set to make changes to the UK government’s tax burden on non-citizens in an attempt to ease concerns about the tax changes announced in October’s Budget.

The chancellor told a surprise event at the World Economic Forum in Davos on Thursday that the government would soon present an overhaul of its budget bill.

This will make it easier to access the temporary repatriation facility, which allows non-residents to bring foreign income and profits made before April 2025 into the UK and pay tax at a reduced rate of 12 percent on the 2025-26 and 2026-27 taxes. years, rising to 15 per cent in 2027-28 – compared to the top tax rate of 45 per cent.

The government’s proposed reform would make it easier for certain funds to receive broad corporate tax rates. But while the scale may be good for some non-doms, it’s unlikely to carry the phone for most.

Reeves said at the Davos event of The Wall Street Journal on Thursday that the government was “listening to the concerns expressed by the rest of the government”, in response to a question about the increase in the number of millions of people leaving the UK in months recent ones. .

Commerce Secretary Jonathan Reynolds later confirmed the proposed change, which was first reported by The Times, to reporters in a Swiss mountain resort: “There is a correction in the financial law . . . if you change the tax system, people will want to know, and there will be uncertainty there, so we have to get that message across.”

Reeves announced in the Budget that he is ending the non-domestic regime, which allows UK tax residents whose permanent home or “home” is overseas to avoid paying British tax on their income foreign or capital gains for 15 years.

It will be replaced from 6 April 2025 for four years housing policy providing “international competition arrangements for people coming to the UK on a temporary basis”.

Downing Street said the change would not lead to a fall in tax to replace non-government, and the Treasury still expects to raise £33.8bn over the next five years from the changes.

Non-doms are very concerned about the inheritance tax changes to existing trusts, and that issue is often cited as the main reason they leave the country. .

Rachel de Souza, tax partner at RSM UK, said that while the increase in the temporary refund area was a “good step”, it was “woefully inadequate” to prevent wealthy people from not homes from the UK.

“The way to stem this flow will be to keep the exemption from IHT to offshore trusts, but also to roll back the proposed changes to agricultural and business relief that affect farmers and entrepreneurs.”

Robert Brodrick, a partner at the law firm Payne Hicks Beach, said: “It is encouraging to see that they are finally responding to the concerns of many people affected by this, but I don’t think this will be enough. to stop the tide . . . It helps but exposure to inheritance tax is the biggest nail in the coffin. “

The chancellor also said on Thursday that he wanted to allay concerns from countries including India that the changes to the rules would not affect double tax treaties: “No: we will not change those double tax treaties.”

A Treasury official said: “We are always interested in hearing ideas on how to make our tax system more attractive to talented entrepreneurs and business leaders from around the world to help creating jobs and wealth in the UK.”