Reeves considers reversing non-dom tax raid after millionaire exodus

Rachel Reeves is considering reversing an inheritance tax raid on non-doms amid mounting evidence that it has sparked an exodus of the wealthy.
The Telegraph understands the Chancellor is weighing up whether to reverse her decision to expose people's worldwide assets to 40pc inheritance tax.
Senior City sources said they had been in talks with the Government about how to 'create something more competitive' adding that the focus has 'very much been on the inheritance tax implications'. Varun Chandra, Sir Keir Starmer's business adviser, is understood to be spearheading the negotiations.
Ms Reeves scrapped non-dom status in April, a change that had been widely expected. However, the Chancellor also introduced the sweeping inheritance tax changes, which have been blamed for driving some of Britain's richest people abroad.
Leslie Macleod-Miller, the chief executive of Foreign Investors for Britain, told the Telegraph: 'Inheritance tax is certainly the red line. Research conducted by Oxford Economics said that overwhelmingly inheritance tax was the reason why people would be forced to leave.'
Those to have left in the wake of the tax changes include Richard Gnodde, Goldman Sachs' most senior banker outside the US, and Aston Villa co-owner Nassef Sawiris. Steel magnate Lakshmi Mittal is also preparing to move abroad.
Ms Reeves's decision to look again at the inheritance tax changes suggest they may have sparked a bigger reaction than anticipated.
Anthony Whatling at Alvarez & Marsal, who advises the wealthy on how to structure their assets, said: 'The inheritance tax change is perceived by many as the most contentious aspect of the non-dom reforms – complex and globally out of step.
'If the Government wants to keep wealth – and the business that follows it – in the UK, this is the lever it needs to pull.'
Reversing the policy would be relatively affordable for the Chancellor. While the overhaul of the non-dom regime is projected to bring in £4.5bn by the end of the decade, only £200m of that is expected to come from the inheritance tax change.
Without action, Ms Reeves risks raising far less than hoped from her package of changes. If 25pc of non-doms quit the UK, the Treasury would make no extra money from scrapping the tax status. If a third left, the UK would lose £700m in the first year of the policy, according to the Centre for Economics and Business Research (CEBR).
The Office for Budget Responsibility has warned that its forecasts for the amount of cash raised by the changes are highly uncertain, as they hinge on the behaviour of a small group of people who are highly mobile.
Foreign Investors for Britain has been lobbying for a simpler tax regime more akin to Italy, where wealthy foreigners can pay a specified annual fee to exempt their overseas assets and income from tax charges. In Italy, this fee ranges from €100,000 to €200,000 a year.
Mr Macleod-Miller said he would be 'delighted' if the Government listened to his pleas. He said: 'Every other government is listening to this group, and they're making their tax plans accordingly. But if we continue to drive wealth from this country, the only thing that will happen is that taxes will rise. This will be a country where wealth and growth are simply not welcome.'
A Treasury spokesman said: 'The UK remains highly attractive. Our main capital gains tax rate is lower than any other G7 European country and our new residence-based regime is simpler and more attractive than the previous one, whilst it also addresses tax system unfairness so every long-term resident pays their taxes here.

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