The UK’s controversial non-domiciled (non-dom) inheritance tax, introduced in April 2025, has become a focal point of debate among policymakers and the financial elite. This 40% tax on offshore assets held by non-doms has prompted an exodus of wealthy individuals, including steel magnate Lakshmi Mittal and Egyptian billionaire Nassef Sawiris, who have relocated to jurisdictions like Italy and Abu Dhabi to avoid the levy. In response to intense lobbying from the financial sector, Chancellor Rachel Reeves is reportedly considering adjustments to the policy, potentially rolling back the inheritance tax component in the upcoming autumn budget.
The policy’s implementation has led to significant financial outflows, with high-net-worth individuals seeking more favorable tax environments abroad. The government’s reluctance to backtrack on the policy has been described as “backtracking without backtracking,” indicating a nuanced approach to address the concerns without appearing to reverse the decision entirely. The potential rollback is seen as a measure to retain the UK’s competitiveness in the global financial landscape.
The debate centers on balancing the need for increased tax revenues with the risk of driving away affluent residents who contribute significantly to the economy. The government’s forthcoming decisions will likely shape the future of the non-dom taxation system and its impact on the UK’s financial sector.
