Chancellor Rachel Reeves is facing pressure from lobbyists representing Britain’s 74,000 non-domestic residents to scale back her planned tax changes ahead of her upcoming budget.
The newly formed group, Foreign Investors for Britain, will meet government officials this week to push for a reconsideration of Reeves’ proposed overhaul of the non-domestic tax regime, which could include imposing inheritance taxes on foreign assets.
Non-doms, who are UK residents but considered overseas domiciled for tax purposes, are currently exempt from paying UK taxes on their overseas income. However, Reeves’ proposed changes have raised fears that wealthy non-domestic nations will leave the UK, potentially causing a net loss of tax revenue rather than boosting the treasury. In 2022-23, non-doms contributed £8.9 billion to UK tax revenue.
The lobby group, which was founded in June and has already met with Finance Ministry officials, is proposing an alternative tiered tax system. This would result in non-doms paying a fixed annual amount over a period of fifteen years, based on their assets. Under the plan, someone with personal assets of up to £100 million would have to pay £200,000 annually, while those worth more than £500 million would contribute £2 million annually. Currently non-doms pay up to £60,000 a year.
Leslie MacLeod-Miller, spokesperson for Foreign Investors for Britain, said: “We are glad the government is listening because this is a real problem. Britain is turning into a departure lounge, and without changes we risk losing valuable investment and tax revenue.”
The government has so far defended the proposed changes. A Treasury spokesperson said: “We are tackling unfairness in the tax system to raise revenue to rebuild public services. The outdated non-domestic tax regime will be replaced by a new residency-based regime that focuses on attracting the best talent and investment to Britain.”
The non-dom debate comes amid wider concerns about Reeves’ first budget, which is expected to include significant tax reforms as Labor tries to rebuild the country’s finances.