Rachel Reeves is set to amend her tax raid on non-domiciled individuals after an exodus of millionaires from the UK. The chancellor announced the changes on the sidelines of the World Economic Forum in Davos, saying the government has listened to concerns raised by the non-dom community.
Speaking to Wall Street Journal editor Emma Tucker, Reeves said an amendment to the finance bill will make the temporary repatriation facility more generous. This facility allows non-doms to bring money into the UK at a discounted tax rate over a three-year window. Treasury officials insist the changes will still raise the estimated £33.8bn over five years.
Reeves also reassured non-doms worried about double taxation, stating that the government will not change double-taxation conventions with countries like India. A Treasury source said the government is open to ideas for making the tax regime more attractive to entrepreneurs and business leaders.
Critics, including the Conservatives and Reform UK, condemned the U-turn. Shadow chancellor Mel Stride said the Budget is 'falling apart' and that 'the damage is already done'. Reform UK called the Budget a 'disaster'. Meanwhile, the Countryside Alliance urged a similar review of inheritance tax changes for farmers.
Tax experts gave a mixed response. Charlie Sosna of Mishcon de Reya welcomed the climbdown, noting many clients have relocated abroad. However, Dominic Lawrance of Charles Russell Speechlys said the changes are insufficient, calling them 'a rearrangement of deck chairs on a stricken liner'. Chris Etherington of RSM warned the move may be 'too little, too late' to stem the outflow of wealthy individuals.
