Rachel Reeves, UK finance minister, speaks in CNBC’s Squawk Box outside the World Economic Forum on January 22, 2025 in Davos, Switzerland.
Gerry Miller CNBC
The UK will soften some planned changes to its controversial non-dom tax rules after concerns about a millionaire exodus, the Treasury has confirmed.
Britain’s 200-year-old non-dom regime allows people living in the UK to avoid paying tax on income and capital gains earned abroad for up to 15 years, but who are resident elsewhere for tax purposes. The regime has long been embroiled in controversy, with UK Chancellor of the Exchequer Rachel Reeves at its helm October budget To ensure that it will be abolished from April 2025 and all long-term residents will have to pay inheritance tax on assets worldwide, including those held in trust.
Speaking at a fringe event at the World Economic Forum in Davos, Reeves said the government would soon introduce an amendment to the country’s finance bill, increasing the leniency of a rule that allows non-doms to bring money into the UK without paying significant tax. .
“We’re hearing the concerns raised by the non-dom community,” Reeves told The Wall Street Journal’s Emma Tucker when asked about the recent exodus of the super-wealthy.
“In the Finance Bill, we will introduce an amendment that makes the temporary repatriation benefit more generous, enabling non-doms to bring money into the UK without paying significant tax,” he added.
Reeves on Thursday sought to reassure wealthy foreign investors that the changes would not affect double-tax deals held between the UK and other countries.
“There is some concern from countries that have double taxation conventions with the UK, including India, that they will be drawn to pay inheritance tax. That is not the case. We are not going to change those double taxation provisions,” she said.
In a statement to CNBC confirming the plans, a Treasury spokesman said the tweaks were designed to “encourage non-doms to bring their funds to the UK, spend and invest that money here.”
“While we do not expect these changes to impact on the £33.8 billion in tax revenue that the OBR predicts will be raised over five years, they will reflect our continued engagement with stakeholders to ensure the reforms announced in the Budget work as intended,” the statement added. has been .
The government’s October clampdown on non-doms formed part of a wider measure targeting high-net-worth individuals, with new levies on private equity bosses, private schools, second homes and private jets.
Critics warned at the time that the moves would spark A mass exodus of the super rich — many of whom they say will be key contributors to the government’s pro-investment agenda.
An estimated 10,800 millionaires left the UK last year, an increase of 157% in 2023, according to updated figures from global analytics firm New World Wealth and investment migration adviser Henley & Partners.
