Shorter Reads

UK to soften tax rules for wealthy foreigners after millionaire exodus, Rachel Reeves says

The U.K. will soften some planned changes to its controversial non-dom tax rule following concerns of a millionaire exodus, the Treasury has confirmed.

2 minute read

Published 30 January 2025

Authors

Share

Key information

The U.K. will soften some planned changes to its controversial non-dom tax rule following concerns of a millionaire exodus, the Treasury has confirmed.

Britain’s 200-year-old non-dom regime permits people living in the U.K., but who are domiciled elsewhere for tax purposes, to avoid paying levies on income and capital gains earnings overseas for up to 15 years. The regime has long courted controversy, leading U.K. Finance Minister Rachel Reeves in her October budget to confirm that it would be abolished from April 2025, and that all long-term residents would be subject to inheritance tax (IHT) on their worldwide assets, including those held in trust.

Speaking at a fringe event at the World Economic Forum in Davos, Reeves said the government would soon put forward an amendment to the country’s Finance Bill, increasing the generosity of a rule which allows non-doms to bring money to the UK without paying significant taxes.

“We have been listening to the concerns that have been raised by the non-dom community,” Reeves told The Wall Street Journal’s Emma Tucker when asked about recent departures of the ultra-wealthy.

“In the finance bill, we will be tabling an amendment which makes more generous the temporary repatriation facility, which enables non-doms to bring money into the UK without paying significant taxes,” she added.

Reeves on Thursday also sought to reassure wealthy overseas investors that the changes would not affect double-taxation agreements held between the U.K. and other countries.

“There’s been some concerns from countries that have double taxation conventions with the U.K., including India, that they would be drawn in to be paying inheritance tax. That’s not the case. We’re not going to be changing those double taxation conventions,” she said.

In a statement to CNBC confirming the plans, a Treasury spokesperson said the tweaks were designed to motivate non-doms “to bring their funds to the U.K., encouraging them to spend and invest this money here.”

“While we do not expect these changes to impact the £33.8 billion of tax revenue that the OBR forecast to raise over five years, they reflect our continued engagement with stakeholders to make sure the reforms announced at Budget operate as intended,” the statement added.

The government’s October clampdown on non-doms formed part of wider measures aimed at the upper echelons, with new levies placed 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, they said, would be key contributors to the government’s pro-investment agenda.

An estimated 10,800 millionaires left the U.K. last year, according to updated figures from global analytics firm New World Wealth and investment migration advisers Henley & Partners, a 157% increase on 2023.

“Most eligible HNW taxpayers will wish to make full use of the temporary repatriation facility (TRF) and will welcome the news that the scheme is to be made more attractive,”

James Austen, tax partner at Collyer Bristow, said that the amendment signaled on Thursday would be welcome news for many high net worth taxpayers, but he questioned whether it would be enough to stem wealth outflows.

“The government’s proposed amendment to the Finance Bill is not a significant change to its plans, and many of the concerns about the new regime, particular in relation to trusts and IHT, remain. I don’t expect this will ‘move the dial’ for most non-doms,” he said by email.

“The TRF is welcome news to the non-dom community still in the UK who may now stay a while longer, although this may only delay but not prevent their plans to leave, and for others it may be too little too late,” added Matthew Braitwaite, head of Wedlake Bell’s private client offshore team.

This article was first published by CNBC: UK to soften tax rules for wealthy foreigners after millionaire exodus, Rachel Reeves says

Related latest updates
PREV NEXT

Related content

Arrow Back to Insights

Shorter Reads

UK to soften tax rules for wealthy foreigners after millionaire exodus, Rachel Reeves says

The U.K. will soften some planned changes to its controversial non-dom tax rule following concerns of a millionaire exodus, the Treasury has confirmed.

Published 30 January 2025

Associated sectors / services

  • Tax & Estate Planning
  • UK trusts, tax and estate planning

Authors

The U.K. will soften some planned changes to its controversial non-dom tax rule following concerns of a millionaire exodus, the Treasury has confirmed.

Britain’s 200-year-old non-dom regime permits people living in the U.K., but who are domiciled elsewhere for tax purposes, to avoid paying levies on income and capital gains earnings overseas for up to 15 years. The regime has long courted controversy, leading U.K. Finance Minister Rachel Reeves in her October budget to confirm that it would be abolished from April 2025, and that all long-term residents would be subject to inheritance tax (IHT) on their worldwide assets, including those held in trust.

Speaking at a fringe event at the World Economic Forum in Davos, Reeves said the government would soon put forward an amendment to the country’s Finance Bill, increasing the generosity of a rule which allows non-doms to bring money to the UK without paying significant taxes.

“We have been listening to the concerns that have been raised by the non-dom community,” Reeves told The Wall Street Journal’s Emma Tucker when asked about recent departures of the ultra-wealthy.

“In the finance bill, we will be tabling an amendment which makes more generous the temporary repatriation facility, which enables non-doms to bring money into the UK without paying significant taxes,” she added.

Reeves on Thursday also sought to reassure wealthy overseas investors that the changes would not affect double-taxation agreements held between the U.K. and other countries.

“There’s been some concerns from countries that have double taxation conventions with the U.K., including India, that they would be drawn in to be paying inheritance tax. That’s not the case. We’re not going to be changing those double taxation conventions,” she said.

In a statement to CNBC confirming the plans, a Treasury spokesperson said the tweaks were designed to motivate non-doms “to bring their funds to the U.K., encouraging them to spend and invest this money here.”

“While we do not expect these changes to impact the £33.8 billion of tax revenue that the OBR forecast to raise over five years, they reflect our continued engagement with stakeholders to make sure the reforms announced at Budget operate as intended,” the statement added.

The government’s October clampdown on non-doms formed part of wider measures aimed at the upper echelons, with new levies placed 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, they said, would be key contributors to the government’s pro-investment agenda.

An estimated 10,800 millionaires left the U.K. last year, according to updated figures from global analytics firm New World Wealth and investment migration advisers Henley & Partners, a 157% increase on 2023.

“Most eligible HNW taxpayers will wish to make full use of the temporary repatriation facility (TRF) and will welcome the news that the scheme is to be made more attractive,”

James Austen, tax partner at Collyer Bristow, said that the amendment signaled on Thursday would be welcome news for many high net worth taxpayers, but he questioned whether it would be enough to stem wealth outflows.

“The government’s proposed amendment to the Finance Bill is not a significant change to its plans, and many of the concerns about the new regime, particular in relation to trusts and IHT, remain. I don’t expect this will ‘move the dial’ for most non-doms,” he said by email.

“The TRF is welcome news to the non-dom community still in the UK who may now stay a while longer, although this may only delay but not prevent their plans to leave, and for others it may be too little too late,” added Matthew Braitwaite, head of Wedlake Bell’s private client offshore team.

This article was first published by CNBC: UK to soften tax rules for wealthy foreigners after millionaire exodus, Rachel Reeves says

Associated sectors / services

  • Tax & Estate Planning
  • UK trusts, tax and estate planning

Authors

Need some more information? Make an enquiry below.

    Subscribe

    Please add your details and your areas of interest below

    Specialist sectors:

    Legal services:

    Other information:

    Jurisdictions of interest to you (other than UK):



    Article contributor

    Enjoy reading our articles? why not subscribe to notifications so you’ll never miss one?

    Subscribe to our articles

    Message us on WhatsApp (calling not available)

    Please note that Collyer Bristow provides this service during office hours for general information and enquiries only and that no legal or other professional advice will be provided over the WhatsApp platform. Please also note that if you choose to use this platform your personal data is likely to be processed outside the UK and EEA, including in the US. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information provided. All information will be deleted immediately upon completion of a conversation.

    I accept Close

    Close
    Scroll up

    Find out about Business

    Find out about Dispute Resolution

    Find out about Individuals & Families

    Find out about Real Estate

    We are Collyer Bristow - The law firm for those that
    value individuality, creativity and collaboration.

    Legal & Pricing info Regulatory InformationAccessibilitySitemapPricing and service information

    Read our latest article: Statutory Residence Test

    Read our latest article: UK to soften tax rules for wealthy foreigners after millionaire exodus, Rachel Reeves says

    Read our latest article: What next for McDonald’s after sexual harassment claims?

    Read our latest article: Can your employer force you back to the office?

    Watch our latest video: Video | Non-Dom Tax Amendment Comments (Turkish)

    ExpandNeed some help?Toggle

    < Back to menu

    I have an issue and need your help

    Scroll to see our A-Z list of expertise

    Get in touch

    Get in touch using our form below.



      Business Close
      Private Wealth Close
      Hot Topics Close