Chancellor, Rachel Reeves, is planning to water down changes to tax rules on non-doms amid concerns about the number of high net worth individuals (HNWI) leaving the UK.

Addressing a fridge event at the World Economic Forum in Davos, Reeves said that the government would be tabling an amendment to the Finance Bill as it seeks to stymie the number of wealthy people exiting the country.

In October’s Budget, Reeves had announced changes to the non-dom regime that would close ‘loopholes’ in the tax rules and begin the process of reforming that tax treatment of carried interest by increasing the applicable rates of capital gains tax.

However, when speaking to The Wall Street Journal, Reeves stated: “We have been listening to the concerns that have been raised by the non-dom community.”

It has been reported that the government will pose an amendment that would increase the temporary reparation facility, enabling non-doms to bring income and capital gains into the UK without paying ‘significant’ taxes.

“There’s been some concerns from countries that have double taxation conventions with the UK, including India, that they would be drawn into paying inheritance tax (IHT),” Reeves continued.

“That’s not the case: we are not going to be changing those double-taxation conventions.”

However, it has been reported that the government is not planning to alter its overall approach to replacing the non-dom tax regime.

A Treasury source told The Times: “We’re always interested in hearing ideas for making our tax regime more attractive to talented entrepreneurs and business leaders from around the world to help create jobs and wealth in the UK.”

Commenting on the reports, Utmost Wealth Solutions global wealth specialist, Marc Acheson, said: “The measures announced at the Budget made the UK far less attractive to non-doms and created the perfect storm of many leaving and less coming in.

“The replacement of the current remittance basis with the new 4-year foreign income regime encouraged the wrong type of behaviours and gave little incentive for people to come to the UK and establish long-term roots.

“Many of our clients have been exploring other jurisdictions in the EU and UAE. This community would rather not leave the UK and contribute significantly to the exchequer, so any review of those changes, particularly with reference to the erosion of IHT protections on existing settlements would be welcome.”

Forvis Mazars partner, Sean Cockburn, added: "The Chancellor’s recent comments during the World Economic Forum in Davos suggest we can expect some updates to the 2024-25 Finance Bill, perhaps in reaction to reports of an exodus of wealthy individuals from the UK.

“As welcome as revisions might be for non-doms, these new rules are due to take effect from April 2025 and any changes to the incoming regime at this stage will cause further uncertainty with little time for those affected to react. To be able to plan efficiently and effectively, stability is also needed."

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