Rachel Reeves has ordered a review of the impact of the abolition of non-resident tax status in the UK, as questions grow over whether the reforms will deliver the revenue promised by the Treasury.
The Chancellor will assess self-assessment tax returns for the 2025-26 tax year. The results are expected to be published in 2026. It is the first time the government has publicly confirmed that it is formally assessing the consequences of scrapping the century-old tax system.
Non-dom status, abolished in April, previously allowed wealthy British residents to avoid paying British taxes on income and assets held abroad by claiming their permanent residence was abroad. Reeves replaced the system with a residence-based model, a move that has proven highly controversial among internationally mobile individuals, particularly because of its impact on inheritance tax burdens.
The government has forecast that the reforms will generate £34 billion in additional tax revenue by 2029-30. But economists and tax consultants warn that the estimate could be optimistic, pointing to signs of an accelerating exodus of wealthy individuals.
In recent weeks we have reported that Mohamed Mansour, a long-time Conservative Party donor, has moved his residence from the UK to Egypt, while Lakshmi Mittal, the Indian steel tycoon, has apparently changed his tax residence to Switzerland.
Details of the review emerged following a freedom of information request from Chris Walker, an economist at consultancy ChamberlainWalker, who was seeking payroll data on non-doms. HM Revenue & Customs rejected the application, citing an ongoing “review” of non-dom reforms.
Walker criticized the refusal, saying: “It is deeply worrying that HMRC is still refusing to publish this important payroll data on non-doms, at a time when ministers are relying on these reforms to secure future tax revenues.”
The move builds on the foundations laid by Jeremy Hunt, the former Conservative chancellor, who initiated plans to scrap non-dom status but shied away from sweeping changes to inheritance tax. Reeves went further after taking office, arguing that the reforms were necessary to improve justice and shore up public finances.
The Treasury is now under increasing pressure to demonstrate that the policy will not ultimately weaken the tax base by moving wealth and associated economic activity offshore.
