Sign in Subscribe
Rich people

Labour's Non-Dom Tax Plan in Jeopardy

Strategic Insights

— 1 min read

Rachel Reeves, the Chancellor of the Exchequer, is considering watering down her plans to crack down on "nom-doms" - UK residents who are domiciled outside Britain for tax purposes - amid fears that the move would not raise any significant revenue. According to reports, the Labour government had hoped to raise around £1 billion per year by targeting wealthy individuals who use the non-dom tax perk to minimize their tax liabilities in the UK. However, Treasury officials are now reportedly warning that the policy could even cost the government money due to the risk of super-rich individuals leaving the UK.

Key Takeaways:

  • The Labour government had planned to raise £1 billion per year by cracking down on non-doms, but Treasury officials are now concerned that the policy may not raise any significant revenue.
  • The Office for Budget Responsibility (OBR) is expected to issue a forecast that the policy will either raise little to no money or even cost the government money due to non-doms limiting their time in the UK.
  • Treasury officials are warning that the policy could lead to a brain drain as super-rich individuals leave the UK.
  • One of the most high-profile non-doms is Akshata Murty, the wife of former prime minister Rishi Sunak, who was embroiled in controversy over her tax status in 2022.
  • The Labour government is committed to removing the outdated non-dom tax regime and replacing it with a new residence-based regime focused on attracting talent and investment to the UK.

Statistics:

  • The Labour government had hoped to raise around £1 billion per year by cracking down on non-doms.
  • The Office for Budget Responsibility (OBR) is expected to issue a forecast that the policy will either raise little to no money or even cost the government money due to non-doms limiting their time in the UK.
  • The UK has benefited from non-dom tax policies in the past, but the government is committed to removing the outdated regime.

Sources:

  • Financial Times
  • The Guardian
  • The Independent
  • HM Treasury
  • PA Wire

Read more