Plans to abolish non-estate status will be changed to allow a more generous shift away from tax benefits, Chancellor Rachel Reeves has announced.
Reeves told an audience at the World Economic Forum in Davos that changes would be made to upcoming legislation to increase the generosity of a facility to help non-domestics repatriate their funds to the UK.
Non-estate status allows people who live in the UK to avoid paying UK tax on money earned abroad because their permanent home for tax purposes is outside the country .
Labor has pledged to remove the statute from its election manifesto, saying it would address injustice in the tax system and raise extra money for public services.
However, critics have raised concerns that the changes could prompt wealthy people to leave the UK.
A report released earlier this week According to global analytics firm New World Wealth and Investment Migration, Henley & Partners, found that more than 10,000 millionaires left the UK in 2024, an increase of 157% on the previous year.
Analysts cited factors including additional taxes affecting non-DOMS and other wealthy people as well as the growing dominance of the United States and Asia in the technology sector and the declining importance of the London Stock Exchange.
Reeves told an event hosted by the Wall Street Journal: “We have listened to the concerns that have been raised by the non-domestic community.”
Changes will be made to the Temporary Repatriation Facility, a three-year scheme to help former non-DOMS bring their assets to the UK at an updated tax rate.
Downing Street said the adjustments, which will be made to changes to the Finance Bill, had not changed the government’s overall approach “to replacing the outdated non-domestic tax regime”.
The Prime Minister’s official spokesperson said the new system “addresses the injustice in our tax system, attracts the best talent and investment to the UK and ensures that everyone who is a long-term resident of the UK Uni pay their tax here.”
A Treasury spokesperson said the changes were not expected to impact the £33.8 billion the policy was predicted to increase over the next five years by the government’s independent forecaster.
“The temporary repatriation facility is designed to encourage non-DOMS to bring their funds to the UK, encouraging them to spend and invest that money here,” the spokesperson added.
However, Nigel Green, chief executive of global financial advisory firm, Devere Group, said the announcement had “landed with a thud” among investors and wealthy individuals.
He said the “vague proposal to adjust the rules offers neither the clarity nor the assurances needed to reverse the damage already inflicted.”
Tory shadow chancellor Mel Stride said: “Labour’s budget is collapsing before our eyes.
“During the election Labor said their plans would raise money, they have now been forced to admit their plans are making the UK less attractive.
“But the damage is already done – tax revenue equivalent to hundreds of thousands of taxpayers has already been lost.”
Meanwhile, the Scottish National Party accused the chancellor of striking a “Davos deal for millionaires”, saying the government had become “rapidly out of touch”.
The party’s economy spokesman, Dave Doogan, said Reeves had “an ear for millionaires” but was “deaf to the plight of those millions still struggling with the cost of care crisis.” life”.
Reeves chose to announce the relaxation at Davos as part of a multi-pronged effort to show his willingness to change policy to help economic growth.
On Wednesday, she also outlined visa changes to allow top talent in artificial intelligence (AI) and drug research to come to the UK.
Some in the industry believe it is possible for the United Kingdom to poach top science and pharmaceutical talent from the United States under the new administration and in AI from the European Union.
