Labour Government Rethinks Non-Dom Tax Rules Amid Revenue Concerns

Britain's Labour government is reconsidering its plans to toughen tax rules on wealthy foreigners living in the country. The proposed changes to the non-dom tax regime aimed to increase taxes on the wealthiest to invest in public services but are now under review due to concerns about revenue impact.

Britain's Labour government is re-evaluating its strategy to tighten tax regulations for wealthy foreigners residing in the country, specifically focusing on the non-dom tax scheme, according to media reports on Friday.

Prime Minister Keir Starmer's Labour Party, elected in July with a commitment to revitalize Britain, initially proposed increasing taxes on the wealthiest to fund public services and infrastructure projects.

The non-dom tax system, which allows residents to pay minimal UK taxes on overseas income, has long sparked debate. Former Conservative administrations had also sought stricter rules. However, the Labour Party intended to extend these measures, including foreign assets in inherited trusts to prevent tax evasion.

Finance Minister Rachel Reeves is reportedly considering diluting the reforms amid concerns that they might not generate additional revenue, according to the Financial Times. Private banks and advisors warn that clients with non-dom status may leave the UK if changes proceed.

A Treasury spokesperson remarked that these reports are speculative, emphasizing the administration's commitment to addressing tax system inequities. The Office for Budget Responsibility will validate the budget announcements on October 30, aiming to replace the non-dom tax regime with a globally competitive, residence-based system to attract top talent and investment to the UK.

(With inputs from agencies.)