Rachel Reeves is considering climbing down on her non-dom crackdown to stem the flow of ultra-rich taxpayers leaving the UK.
The chancellor is deciding whether to U-turn on the decision to tax non-domiciled individuals inheritance tax based on their global assets.
The changes, which formed a key part of Labour’s general election campaign, have raised concerns about an exodus of the wealthy as they flee in search of lower taxes.
And a senior City figure told the Financial Times “there will most likely be some tweaks to inheritance tax to stop the non-dom exodus”.
Billionaire steel tycoon Lakshmi Mittal is among those said to be considering leaving Britain as a result of the chancellor’s changes.
A spokesman for the Treasury said: “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.”
The non-dom tax loophole, which lets foreign nationals living in Britain avoid paying tax on overseas earnings, was thrust into the spotlight when The Independent first revealed that Akshata Murty, Rishi Sunak’s wife, had used it to save potentially millions of pounds.
Ms Murty, whose family business is estimated to be worth around £60bn, later said she would no longer claim the status on her worldwide earnings. At the time, she said she did not want her tax status to be a “distraction for my husband or to affect my family”.
Since Labour came to power in July, the UK has lost a millionaire every 45 minutes, with the exodus driven by Labour’s tax grabs and a lack of business confidence.
Britain lost a net 10,800 millionaires last year, a 157 per cent increase on 2023, including 78 centi-millionaires (worth at least £100 million) and 12 billionaires. They left for other countries mainly in Europe, such as Italy and Switzerland, as well as the United Arab Emirates.
Tax planners have repeatedly warned of an exodus of Britain’s super wealthy, with many blaming the impact of Ms Reeves’ first Budget in October.
And Britain experienced its most significant drop in billionaires ever last year, according to the Sunday Times Rich List.
The non-dom regime was replaced by the chancellor with a residency tax under which those living in the UK for more than four years are made to pay income and capital gains tax on overseas earnings.
Those who stay long enough also face paying inheritance tax on overseas assets.
This article was written by Archie Mitchell from The Independent and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com. (Photo by Carl Court/Getty Images)