The government is digging a deeper fiscal black hole with its proposed non-dom changes, according to Nimesh Shah, chief executive of Blick Rothenberg.
Shah believed Reeves was making the £22bn hole in public finances wider by “handing an easy exit” to non-doms planning to leave in the next tax year.
He said: “Buried in the technical detail of the new Labour government’s non-dom changes is a bizarre transitional rule. The rule gives non-doms an exit route out of the UK in the next tax year without being caught by the new ‘10-year tail’ for inheritance tax.
“This rule offers an easy exit for non-doms who are already looking to leave, making it feel as if the chancellor is handing them first class plane tickets to get out of the UK as quickly as possible.”
In her Budget last week, Reeves announced scrapping the current non-dom tax regime and replacing it with a simpler resident-based regime.
David Lesperance, managing director at Lesperance & Associates told FT Adviser that in the 48 hours since Reeves had delivered the Budget, he had had seven clients trigger their exit strategy.
He also said he had received three new enquiries from HNW UK taxpayers looking to leave the UK.
“Those UK taxpayers with significant capital gains dodged a bullet as no exit tax was announced. However, they are still within the target of the chancellor in future budgets.
“This Damocles Sword combined with a significant increase in capital gains tax rates as of April 2025 will predictably result in an exodus as taxpayers look to avoid not only higher rates, but any capital gains hit,” he added.
Shah shared the same sentiment as Lesperance saying these plans would “undoubtedly” speed up relocation plans.
He said: “This raises serious concerns around whether the government will raise anywhere close to the £12.7bn projection announced in the Autumn Budget - if the non-doms have gone, where does the government think the money is coming from? It feels like Rachel Reeves is only digging her fiscal black hole deeper.”
Shah thought the £12.7bn projection felt like a “punchy target” with the bar pushed higher given Reeves’ changes to CGT, IHT reliefs and carrier interest rules.
“The government only made their job much harder,” he added.
alina.khan@ft.com
