05 April 2024 , 20:59
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In a major U-turn last month Chancellor Jeremy Hunt said he would axe the non-dom tax break. But Labour’s Rachel Reeves warned the plans contain ’a load of loopholes’
Labour will close a £430million "loophole" in the Tories’ plans to abolish the outdated non-dom tax status for the super-rich.
In a major Budget U-turn last month Jeremy Hunt said he would axe the tax break enjoyed by around 70,000 foreign nationals who live in the UK. But speaking to The Mirror, Shadow Chancellor Ms Reeves said: "They [the Conservatives] have mainly stolen our policy - but they haven’t stolen it properly."
Under Government plans from April 2025 the tax breaks will be scrapped for anyone who has lived in the UK for more than four years. Ministers are also consulting on changes to inheritance tax for wealthy foreign UK residents. But the Treasury has said non-UK assets placed into an overseas trust by April 2025 will not be in the scope of inheritance tax.
A Labour analysis this week suggested the "loophole" could be worth up to £430million-a-year for the Treasury.
Shadow Chancellor Rachel Reeves says she will close the non-dom loopholes ( Image: Getty Images)
Asked if Labour in power would close the loophole, Ms Reeves told The Mirror: "Yes, absolutely, because I believe in a principle that if you make Britain your home you should pay your taxes here and under Labour you will."
She said: "When we’ve got 7.5million on NHS waiting lists, when we’ve got concrete collapsing in the rooms of schools, when we’ve got social care and leisure centres at a local level under such pressure, it is right that people who make their home here pay their taxes here. And that is absolutely what I will deliver as Chancellor."
Ms Reeves added: "It will probably come as no surprise to Mirror readers but when the Tories do something like close the non-dom tax loophole they actually leave a load of loopholes in their policy whereby any current non-doms will be able to get out of paying the taxes that they should be paying and would be paying under Labour plans.
"As well as implementing any clampdown on non-dom taxation we will also close those loopholes to make sure that is a fair system and that everybody who calls Britain their home pay their taxes here."
In 2022 it emerged Rishi Sunak’s wife, Akshata Murty, had claimed the non-dom status which allows eligible people to avoid paying tax on their overseas income. The explosive row led to the PM recusing himself from discussions ahead of the Budget on scrapping the policy to avoid a “potential or perceived” conflict of interest.
Earlier this week a Treasury spokesman said: "The Government will abolish the current tax system for non-doms and replace it with a modern, simpler and fairer residency-based system - using the revenue to cut taxes on working people."