UK Reeves Reconsiders non-dom Tax Overhaul Amid Fears of Wealth Flight

[Social Media]

 

Chancellor Rachel Reeves is considering significant revisions to Labour’s high-profile plan to scrap the non-domiciled tax regime, following mounting concern over a growing exodus of wealthy individuals from the UK. The policy, initially intended to signal a tougher stance on tax fairness, is now under review as evidence emerges that its economic fallout may be more severe than anticipated.

 

At the heart of the debate is the new provision, due to take effect in April, that would impose inheritance tax on the global assets of UK residents who are considered non-domiciled—individuals who live in Britain but have their permanent home abroad. Reeves is reportedly contemplating easing this element of the policy after criticism that it could drive high-net-worth individuals to jurisdictions with more favourable tax regimes.

 

“There will most likely be some tweaks to inheritance tax to stop the non-dom exodus,” a senior City figure told the Financial Times, as concern mounts over the unintended economic consequences. Among those reportedly considering departure is Lakshmi Mittal, the billionaire steel magnate with an estimated fortune of £14.9 billion. He has lived in the UK since 1995 and owns a global portfolio of luxury properties, including a chalet in the Swiss resort of St Moritz.

 

The Treasury has responded to the growing backlash by signalling flexibility. “The government will continue to work with stakeholders to ensure the new regime is internationally competitive and continues to focus on attracting the best talent and investment to the UK,” it said in a statement.

 

Business data compiled by Bloomberg points to a sharp rise in corporate departures. More than 4,400 company directors exited the UK over the past year, with the pace accelerating in April—when departures were 75 per cent higher than in the same month the year before. Sectors hit hardest include finance, insurance, and property, all traditionally popular with non-dom professionals and investors.

 

The abolition of the non-dom regime—originally introduced centuries ago and allowing affluent foreign residents to avoid UK tax on global income in exchange for an annual fee starting at £30,000—was first announced by former Chancellor Jeremy Hunt in March 2024. In a surprise move, Hunt pre-empted Labour’s longstanding commitment to scrap the system, forcing the party to introduce its own version in the run-up to the general election.

 

The replacement is a residence-based tax model that imposes income and capital gains taxes on global earnings for anyone who has lived in the UK for more than four years. Over time, these residents would also become liable for a 40 per cent inheritance tax on their worldwide assets—one of the highest rates globally.

 

Although the Office for Budget Responsibility (OBR) initially predicted that between 12 and 25 per cent of non-doms might leave due to the changes, a recent Oxford Economics survey suggests that tax professionals now expect the figure to be far higher. Sixty per cent of advisers reported that over 40 per cent of their non-dom clients were planning to relocate within two years of the reforms.

 

Bloomberg has identified several high-profile figures who have already moved abroad, including French heiress Anne Beaufour, German investor Max Gottschalk, Magna Capital CEO Alexander Ginzburg, JC Flowers co-president Tim Hanford, and boxing promoter Eddie Hearn.

 

Mittal, who handed control of ArcelorMittal to his son Aditya four years ago but whose family still owns 40 per cent of the steel giant, exemplifies the type of ultra-wealthy individual now being drawn to more accommodating tax regimes abroad.

 

 

As the economic implications become clearer, Reeves faces mounting pressure to adjust Labour’s policy to protect investment and prevent further departures. “This is not just a political issue anymore,” one adviser noted. “It’s about protecting the UK’s position as a global hub for talent and capital.”

 

  Adapted by ASEAN Now from The Times  2025-06-20

 

 

[ukrules]

Yeah, this often happens. Raising taxes is one way to get rid of all your wealthy. Great job.

Thailand is doomed to follow this same road and the result will be the same unless they get their act together.

 

Remember though, we're one election away from this exact same path, it's what the people voted for last time there was an election. The only reason it's not in place already is because extraordinary measures were taken to keep Move Forward out.

Those measures are now collapsing by the day.

[JonnyF]

4 hours ago, Social Media said:

Chancellor Rachel Reeves is considering significant revisions to Labour’s high-profile plan to scrap the non-domiciled tax regime, following mounting concern over a growing exodus of wealthy individuals from the UK.

 

Oh look, Rachel from accounts has finally worked out that if you try to take wealth from the wealthy in the form of sky high taxation, they simply take their wealth elsewhere. 

 

That's cute.

[Scottie12]

7 hours ago, ukrules said:

Yeah, this often happens. Raising taxes is one way to get rid of all your wealthy. Great job.

Thailand is doomed to follow this same road and the result will be the same unless they get their act together.

 

Remember though, we're one election away from this exact same path, it's what the people voted for last time there was an election. The only reason it's not in place already is because extraordinary measures were taken to keep Move Forward out.

Those measures are now collapsing by the day.

 

[Photoguy21]

Many have already left. As always she is late to the party.

[IsaanT]

Clear warnings about an exodus of the wealthy were made before Reeves implemented this policy.  The fact that this is now happening, and having a secondary effect on the economy, should surprise nobody.

I am concerned about how much long-term damage the Labour party will do to the UK before they can be ejected in 2029 (hopefully sooner).