UK to ease tax rules for wealthy foreigners after millionaire exodus, says Rachel Reeves

The UK will soften some planned changes to its controversial non-dom tax rule following concerns about a millionaire exodus, the Treasury has confirmed.

Britain’s non-dom regime, which has existed for 200 years, allows people who live in the United Kingdom, but are domiciled elsewhere for tax purposes, to avoid paying tax on income and capital gains in abroad for a maximum of 15 years. The regime has long generated controversy, prompting UK Finance Minister Rachel Reeves in her october budget to confirm that it would be abolished from April 2025 and that all long-term residents would be subject to inheritance tax on their assets worldwide, including those held in trust.

Speaking at a side event at the World Economic Forum in Davos, Reeves said the government will soon introduce an amendment to the country’s finance bill, increasing the generosity of a rule that allows non-dominants to bring money into the UK without paying significant taxes. .

“We’ve been listening to the concerns raised by the non-dominant community,” Reeves told the Wall Street Journal’s Emma Tucker when asked about the recent departures of the ultra-wealthy.

“In the Finance Bill, we will introduce an amendment to make the temporary repatriation mechanism, which allows non-dominants to bring money into the UK without paying significant tax, more generous,” he added.

On Thursday, Reeves also sought to reassure wealthy foreign investors that the changes would not affect double taxation agreements made between the UK and other countries.

“There have been some concerns from countries that have double tax treaties with the UK, including India, that they would be forced to pay inheritance tax. That is not the case. We are not going to change those double tax treaties” . she said.

In a statement to CNBC confirming the plans, a Treasury spokesperson said the adjustments were designed to encourage non-dominants “to bring their funds to the UK, encouraging them to spend and invest this money here”.

“While we do not expect these changes to impact the £33.8 billion of tax revenue the OBR expects to raise over five years, they reflect our ongoing commitment to stakeholders to ensure the reforms announced in the Budget work as intended,” adds the statement. .

The government’s October crackdown on non-doms was part of broader measures aimed at the upper echelons, with new taxes levied on private equity employers, private schools, second homes and private jets.

Critics warned at the time that the measures would cause a massive outflow of ultra-rich individuals Many of whom, they said, would be key contributors to the government’s pro-investment agenda.

An estimated 10,800 millionaires left the UK last year, according to updated figures from global analytics firm New World Wealth and investment migration advisers Henley & Partners, an increase of 157% on 2023.