29 February 2024 , 08:29
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Jeremy Hunt is considering scrapping or scaling back the "non-dom" tax loophole for super-rich UK residents in a major U-turn.
Labour pledged to abolish the measure two years ago after it was revealed Rishi Sunak's non-dom wife Akshata Murty could have saved millions. The Chancellor has previously described scrapping the status as the "wrong thing to do" and suggested rich foreigners could leave the UK.
“These are foreigners who could live easily in Ireland, France, Portugal, Spain," he told the BBC in 2022. "They all have these schemes. All things being equal, I would rather they stayed here and spent their money here."
But Mr Hunt is now looking at the option as he desperately searches for extra cash to fund general tax cuts at his pre-election Budget. The loophole allows a UK resident whose permanent home, or domicile, is outside of Britain, to avoid paying UK tax on overseas income and potentially save millions.
Poaching the policy from Labour and targeting the non-dom status, which benefits around 70,000 wealthy individuals, could raise around £3billion. It is understood Mr Hunt will make a final decision after receiving the economic forecasts from the Office for Budget Responsibility on Friday.
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Labour has already earmarked the funds for key pledges, including millions more NHS appointments and scans to clear the record backlog. A Labour source said: “We will wait and see whether the Chancellor manages to get this past Rishi Sunak given his family finances.”
The Chancellor is also said to be considering a squeeze on public spending in order to appease Tory MPs and deliver tax cuts at the Budget next week. But just weeks ago official figures showed the UK economy had plunged into recession.
Shadow Chancellor Rachel Reeves said on Wednesday Labour would inherit the worst economic situation of any incoming government "since the Second World War" if the party wins power.
Highlighting "debt interest payments, growth, living standards and taxation" she accused the Tories of "burning the whole house down". She said: "George Osborne said in 2010 that they were going to fix the roof. What they've done is smash the windows, broken the door down and are burning the whole house down."