- By Jennifer McKiernan
- BBC political reporter
The special non-dom tax status will be abolished, the chancellor has announced in his Budget, saying those with the “broadest shoulders” would pay more.
The rules would be simpler from April 2025, raising £2.7bn, Jeremy Hunt said.
Non-domiciled (non-dom) people live in the UK, but have their home overseas for tax purposes and do not pay UK tax on money they make elsewhere.
Mr Hunt said that, from 2025, new arrivals to the UK would not pay any tax on foreign income and gains for their first four years of UK residency, but after that, those who continued to live in the UK would pay the same tax as other UK residents.
He told MPs there would be “transitional arrangements” for those benefiting from the current tax arrangements.
Acknowledging that shadow chancellor Rachel Reeves had promised to end the “outdated tax perks” in 2022, Mr Hunt argued that he was following a Conservative former chancellor.
“Nigel Lawson wanted to end the non-dom regime in his great tax reforming budget of 1988, which is where I suspect the Labour party got the idea from,” he said.
“So the government will abolish the current tax system for non-doms, get rid of the outdated concept of domicile and the remittance basis in the tax system, and replace it with a modern, simpler and fairer residency-based system.”
But, Mr Hunt said, where Labour planned to use the cash from its non-dom crackdown “for spending increases”, the Conservatives would use the extra revenue “to help cut taxes on working families”.
The Chancellor also said there would be a two-year period where non-doms would be “encouraged to bring wealth earned overseas to the UK, where it can be spent and invested here”, which he claimed would generate more than £1bn in tax and “an additional £15bn of foreign income”.
The BBC understands the prime minister did not take part in the decision to start taxing non-doms and got sight of the policy only once the final decision had been taken.
Deputy Prime Minister Oliver Dowden took part in discussions with the Treasury on the policy instead.
Sir Keir said: “Take the desperate move, after years of resistance, to finally accept Labour’s argument on the non-dom tax regime – has there ever been a more obvious example of a government that’s totally bereft of ideas?”
Accusing the Chancellor of introducing the policy as a “short-term political gimmick”, he added: “What’s the point of a party that’s out of touch, out of ideas and nearly out of road?”
Sir Keir argued that proceeds from the policy could have been spent on 3.8 million extra NHS operations, 1.3 million emergency dental appointments, and funded breakfast clubs for 4.5 million children, had it been implemented when his party first proposed it.
In 2022, when Mr Hunt was asked by the BBC why he had not tightened rules for non-doms, he replied: “I would rather wealthy foreigners spent their money in Britain, because that supports jobs in our shops, in our restaurants, in our hotels.”
According to the latest figures from HM Revenue and Customs, there were 68,800 people claiming non-dom status in 2022.