Reeves plans to soften non-dom reforms after listening to concerns

Rachel Reeves has said she plans to soften the proposed tax regime on non-doms after listening to their concerns.

Downing Street said the move does not “change the overall approach” to the Government’s policy.

The Tories said it showed that Labour’s Budget was “falling apart in front of our eyes”.

The Chancellor said she would be tabling an amendment to the plans for taxing non-domiciled residents after “listening to the concerns” they raised.

The changes will increase the temporary repatriation facility, which allows non-doms to bring money into the UK without paying significant taxes on it.

It comes after analysts said the additional taxes had prompted an exodus of millionaires.

The Chancellor said taxes on non-doms were increased to raise funds for public services, in an interview at the World Economic Forum in Davos with the Wall Street Journal.

“But we have been listening to the concerns that have been raised by the non-dom community,” Ms Reeves said.

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

The Treasury said the non-dom reforms are still expected to raise the £33.8 billion of tax revenue forecast by the OBR with the change taken into account.

Ms Reeves said she had also heard concerns from countries that have double taxation conventions with the UK, such as India, that they could be required to pay inheritance tax.

“That’s not the case. We’re not going to be changing those double taxation conventions.

“So, countries like India, non-doms from India will not be affected by the inheritance tax changes,” she said.

No 10 said the Finance Bill would bring forward the final policy but that the amendment “doesn’t change the overall approach, which is that we are replacing this outdated regime”.

“It doesn’t change our approach to replacing the outdated non-dom tax regime with a new internationally competitive resident-based system that addresses unfairness in our tax system, attracts the best talent and investment to the UK and ensures that everyone who is a long-term resident of the UK pays their tax here,” the Prime Minister’s official spokesman said.

He was asked why the Government was listening to wealthy non-doms but not farmers, who have pushed back against changes to inheritance rules introduced in the budget.

“We always engage with farmers.

“We are listening to farmers, as the Secretary of State has done and continues to do so and the Prime Minister has obviously engaged with the sector as well,” he said.

The proposed change to the Finance Bill would increase the Temporary Repatriation Facility, a three-year window where non-doms can pay a discounted rate on foreign income and gains.

A Treasury spokesperson said: “While we do not expect these changes to impact the £33.8 billion of tax revenue that the OBR forecast to raise over five years, they reflect our continued engagement with stakeholders to make sure the reforms announced at Budget operate as intended.

“The Temporary Repatriation Facility is designed to encourage non-doms to bring their funds to the UK, encouraging them to spend and invest this money here.”

Tax rises were among the reasons Britain lost a net 10,800 millionaires in 2024, more than double the 4,200 that in 2023, according to the New World Wealth (NWW) global analytics firm.

Shadow chancellor Mel Stride said Labour had been forced to admit its plans made the UK less attractive.

“Labour’s Budget is falling apart in front of our eyes.

“At the election Labour said their plans would raise money, now they have been forced to admit their plans make the UK less attractive.

“But the damage is already done, tax revenue equivalent to hundreds of thousands of taxpayers has already been lost.

“Labour simply does not understand business and the economy, and working people are paying the price.

“It is obvious that this Chancellor is deeply out of her depth.

“She is losing control of the public finances and pressure is now building for yet more tax rises or spending cuts.

“She needs to come back to the UK and get our finances on a sustainable footing.”