Rachel Reeves says UK is softening tax rules for wealthy foreigners after millionaire exodus

The Treasury has confirmed that Britain will soften some planned changes to controversial out-of-home tax rules, amid fears of a millionaire exodus.

The UK's 200-year-old non-domestic regime allows people living in the UK but who are domiciled elsewhere for tax purposes to avoid paying charges on overseas income and capital gains for up to 15 years. The regime has long disputed the controversy, led by UK Finance Minister Rachel Reeves October budget To confirm that it will be abolished from April 2025 and that all long-term residents will be subject to inheritance tax on their worldwide assets, including in trusts.

Speaking at a high-profile event at the World Economic Forum in Davos, Reeves said the government would soon unveil a change to the country's financial bill, increasing the generosity of a rule that allows non-domestics to bring money into the UK without paying significant tax.

“We listened to the concerns that were raised by the community outside the home,” Reeves told Emma Tucker of the Wall Street Journal when asked about the recent departures of the ultra-wealthy.

“We will be tabling an amendment in the Finance Bill that makes a more generous temporary repatriation facility that allows you to get money into the UK without paying significant tax,” she added.

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

“There have been some concerns from countries that have UK dual tax conventions, including India, that they will be drawn into paying inheritance tax. This is not the case. We will not change these double tax conventions,” she said.

In a statement to CNBC confirming the plans, a Treasury spokesman said the amendments were designed to incentivize non-doms “to bring funds to the UK, encouraging them to spend and invest here.”

“While we do not expect these changes to impact the £33.8 billion of tax revenues the OBR forecasts over five years, they reflect our continued stakeholder engagement to ensure the reforms announced in the Budget work as intended,” the statement added.

October's clampdown on non-homes was part of wider measures targeting senior echelons, with new levies placed on private equity bosses, private schools, second homes and private jets.

Critics warned at the time that the movements would backfire Mass exit from ultra-rich individuals -many of whom, they said, would be key players in the government's pro-investment agenda.

An estimated 10,800 millionaires left the UK last year, according to updated figures from global research firm New World Wealth and Investment Migation Advisers Henley & Partners, representing an increase of 157% in 2023.