Plans to abolish non-dom status will be amended to allow a more generous phase out of 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-doms repatriate their funds to the UK.
Non-dom status enables people who live in the UK to avoid paying UK tax on money made abroad because their permanent home for tax purposes is outside the country.
Labour pledged to scrap the status in its election manifesto, saying this would address unfairness in the tax system and raise extra money for public services.
However, critics have raised concerns the changes could prompt wealthy people to leave the UK.
Reeves told an event hosted by the Wall Street Journal: “We have been listening to the concerns that have been raised by the non-dom community.”
The size of the change to the Temporary Repatriation Facility, a three-year scheme to help ex non-doms bring their assets to the UK at a 12% tax rate, was described as a “tweak” that would not be expected to significantly change the money raised from the overall policy.
Downing Street said the tweaks, which will be made through amendments to the Finance Bill, did not change the government’s overall approach “to replacing the outdated non-dom tax regime”.
The prime minister’s official spokesman said the new system “addresses unfairness 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 pays their tax here”.
The policy is expected to raise £12.7bn over the next five years, according to the government’s official economic forecaster.
The chancellor chose to announce the relaxation in Davos as part of a multipronged effort to show willingness to change policy to help economic growth.
On Wednesday she also set out changes to visas to allow top talent in Artificial Intelligence (AI) and medicines research to come to the UK.
Some in industry feel there is an opportunity for the UK to poach top talent in science and pharmaceuticals from the US under the new administration, and in AI from European Union.
