Chancellor to soften non-dom tax crackdown amid exodus of millionaires

The chancellor is to water down the non-domiciled tax changes amid reports of a growing exodus of millionaires from the UK.

Rachel Reeves said she would be tabling an amendment to the plans after “listening to the concerns” of non-domiciled residents.

Speaking at the World Economic Forum in Davos, Reeves told the Wall Street Journal: “We have been listening to the concerns that have been raised by the non-dom community.

“And in the finance bill, we will be tabling an amendment that makes more generous the temporary repatriation facility, which enables non-doms to bring money into the UK without paying significant taxes.”

The chancellor’s U-turn comes amid research data showing that over 10,000 millionaires left the UK in 2024, a 157% increase on 2023.

The data, from global analytics firm New World Health and investment migration advisers Henley & Partners, shows the UK became a net outflow country of millionaires after the Brexit vote in 2016, with the largest exit happening last year.

Non-dom status allows someone who lives in the UK to avoid paying tax on money made abroad because their permanent home is considered outside of the country.

However, Labour had vowed in its election manifesto to abolish the status to “address unfairness in the tax system” and raise funds for public services.

Last October, chancellor announced in her maiden Budget speech that she will remove the “outdated concept” of domicile from the tax system from April 2025.

Meanwhile, the amendment was welcomed by tax advisers.

Robert Brodrick, chairman at Payne Hicks Beach said: “We welcome the Chancellor’s acknowledgement of the concerns that have been raised by the non-dom community, but unfortunately offering to increase the temporary repatriation facility alone is not going to be enough to persuade those who have left (or who are in the process of leaving) to stay in the UK.

“The real issue is the increased inheritance tax exposure (which is made even worse when you take into account Rachel Reeves’ death tax raid on farmers and business owners). The fact is that the UK is no longer nearly as attractive for internationally wealthy people as somewhere like Italy.

“I would urge the Chancellor to use this opportunity to press pause on these destructive changes that have seen an exodus of millionaires from the UK at a time when the country needs to increase tax revenue, not reduce it.”