Reeves to soften proposed crackdown on non-doms

Moves by the chancellor to soften a proposed crackdown on people living in the UK with non-dom status have been backed by academics and tax experts, who say the changes are "sensible and pragmatic".

- ARCHIE MITCHELL

Rachel Reeves is considering rowing back on Labour’s manifesto promise to scrap concessions after former chancellor Jeremy Hunt announced plans to abolish the tax status. There are fears that tightening up Mr Hunt’s proposed changes to the non-dom regime could see wealthy foreigners leave the country, lowering the tax take overall.

Non-dom status lets those who live in the UK but are not permanently settled avoid paying tax on overseas income. In March’s spring Budget, Mr Hunt announced an overhaul of the system, replacing it with a foreign income and gains regime that will still let individuals who come to the UK avoid paying UK tax on overseas earnings, but only for four years.

Labour figures at the time vowed to replace the Tories’ “semiskimmed” plan with a “full-fat” one. Its general election manifesto promised to end the use of offshore trusts to avoid inheritance tax and to remove a discount for those bringing foreign income into the UK in 2025-26, with the measures set to raise £1bn in their first year.

But a Treasury source confirmed discussions are ongoing between the Treasury and Office for Budget Responsibility about which measures would be announced in next month’s Budget. Officials told The Financial Times the government would not “press on regardless” if the changes would cost more than they raise due to non-doms leaving the country en masse.