UK revises controversial tax rule to retain wealthy expats
The United Kingdom plans to ease changes to the controversial tax rules for non-tax residents, reports CNBC. The American service notes that nearly 11,000 millionaires left the Isles last year.
The current system, in place for almost 200 years, allows individuals living in the United Kingdom but with tax residency elsewhere to avoid paying taxes on income and capital gains earned abroad for up to 15 years.
This system has long been controversial, prompting Finance Minister Rachel Reeves to announce in October last year that it would be abolished starting April 2025.
During the World Economic Forum in Davos, Reeves announced that the government will soon present an amendment to the finance bill, increasing the generosity of the rule allowing non-tax residents to bring money into the United Kingdom without paying significant taxes.
"We have listened to the concerns raised by the non-tax resident community," said Reeves in an interview with "The Wall Street Journal."
Tax changes in the UK
Reeves also assured that the changes will not affect double taxation agreements between the United Kingdom and other countries. "We do not intend to change these agreements," she added.
In a statement to CNBC, a Treasury spokesperson stated that the changes aim to encourage non-tax residents to bring their funds to the United Kingdom, which is expected to boost spending and investment in the country.
"We do not expect these changes to affect the 33.8 billion pounds of tax revenues that the OBR (Office for Budget Responsibility) forecasts over five years," it was added.
Critics warn that changes to the controversial system could trigger a massive outflow of the wealthiest individuals, who are crucial to the government's pro-investment agenda. According to data from New World Wealth and advisors Henley & Partners, approximately 10,800 millionaires left the United Kingdom last year, an increase of 157% compared to 2023.
