The UK Will Soften Changes to Non-Dom Tax Rule Amid Concerns of Millionaire Exodus
The UK Treasury has confirmed that it will soften some planned changes to its non-dom tax rule following concerns of a millionaire exodus. The 200-year-old non-dom regime allows individuals living in the UK but domiciled elsewhere for tax purposes to avoid paying taxes on income and capital gains earnings overseas for up to 15 years.
UK Finance Minister Rachel Reeves announced that the government will soon put forward an amendment to the country’s Finance Bill, increasing the generosity of a rule that allows non-doms to bring money to the UK without paying significant taxes. The amendment aims to motivate non-doms to bring their funds to the UK, encouraging them to spend and invest their money in the country.
Reeves also sought to reassure wealthy overseas investors that the changes will not affect double-taxation agreements held between the UK and other countries. She emphasized that the government is not planning to change these agreements, which would prevent countries like India from being drawn into paying inheritance tax.
The Treasury’s statement confirmed that the tweaks are designed to make sure the reforms announced at Budget operate as intended, while also reflecting the government’s continued engagement with stakeholders. The changes are expected to motivate non-doms to bring their funds to the UK, but will not impact the £33.8 billion of tax revenue that the OBR forecast to raise over five years.
The government’s October clampdown on non-doms was part of wider measures aimed at the upper echelons, including 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 exit of ultra-wealthy individuals, many of whom would be key contributors to the government’s pro-investment agenda.
According to updated figures from global analytics firm New World Wealth and investment migration advisers Henley & Partners, an estimated 10,800 millionaires left the UK last year, a 157% increase on 2023.