UK chancellor ready to water down planned Budget raid on wealthy foreigners

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UK chancellor Rachel Reeves is ready to water down her planned Budget raid on wealthy foreigners amid Treasury fears that some of the measures may fail to raise any money, according to people familiar with the matter.

Reeves had hoped to raise £1bn a year by toughening a plan by former Conservative chancellor Jeremy Hunt to end the tax perk for rich UK residents whose permanent home is overseas.

But government officials said on Thursday that Reeves would change tack if the numbers do not add up. The change of tack comes amid warnings that thousands of wealthy UK residents are looking to leave the country.

“We are looking at the details of our proposals. We will be pragmatic, not ideological,” said one official. “We won’t press on regardless, but we are not going to abandon this completely.”

Treasury officials fear that parts of the new crackdown may fail to bring in extra revenues, as former beneficiaries of the regime look to more favourable tax jurisdictions.

Labour had planned to scrap concessions planned by the previous Tory government on so-called “non-doms” — UK tax residents whose “domicile” is abroad.

These include protection from inheritance tax for trusts and a 50 per cent tax discount for non-doms bringing in foreign income in 2025-26.

Reeves is said by colleagues to remain determined to end non-dom status, a policy originally advocated by Labour that is intended to raise £2.7bn by 2028.

This is a developing story