Whitehall in talks with City for non-dom reform after exodus
Whitehall is locked in talks with City bigwigs as the Labour government seeks to attract wealthy investors to the UK following the tumultuous fallout to the scrapping of the non-dom regime.
The non-dom status was changed by Chancellor Rachel Reeves in the Autumn Budget 2024 and was swapped for a residence-based system that taxes all long-term residents on their worldwide income.
The Treasury shifted to a four-year “grace period” model after axing the tax status, but according to the Sunday Times, Reeves is already reviewing the impact of the changes.
Ministers are understood to be in talks around an extension to the current grace period alongside a “pay-to-play” visa for the ultrawealthy. This follows reports that the Chancellor has already kicked off her formal review to stem the damage caused by non-dom reforms
A number of high profile Britain’s entrepreneurs made up the fleeing list of the wealthy exiting the UK including the boss of London-born fintech juggernaut Revolut, who abandoned his main residency in the UK in favour of the United Arab Emirates.
Nik Storonsky’s updated residency was posted in fresh Companies House filings on the fintech chief’s family company in October.
Lobbying for non-dom reform
Business Secretary Peter Kyle, who was appointed to the brief following the reshuffle after Angela Rayner’s bombshell resignation, has led calls to attract wealth creators to the UK.
The Department for Business and Trade has established a “global talent taskforce” in a bid to make Britain more attractive to entrepreneurs as Kyle sets his sights on the UK forging its own $1tn company.
Pressure groups have seized on recent Treasury climbdowns on inheritance tax for farmers and business rates to lobby for a pivot, with lobby group Foreign Investors for Britain said to have submitted a proposal to MPs for a “global investor visa.”
This visa would target stopping the exodus of non-doms and lure in new wealth creators who would pay a fee of £200,000 a year and commit to invest £2.5m in the country.
But this would allow them to skirt being taxed on their foreign income for up to 15 years and exempt them from inheritance tax, according to the Sunday Times.
A government spokesperson said: “The UK remains a highly attractive place to live and invest. Our main capital gains tax rate is lower than any other G7 European country and our new residence-based regime is now simpler and more attractive, while also addressing tax system unfairness so every long-term resident pays their taxes here.”