I’ve always believed that we should look after the wealth creators; the entrepreneurs, the business starters, the self employed, the pioneers, the creative people who spot a market opportunity, the professionals who launch new services and start-ups.

Some of these people are non-doms.

Without their wealth creation and the new businesses and taxes they generate it’s very difficult to fund public services and encourage entrepreneurship.

It is, of course, a balance between looking after the wealth creators and ensuring that the wealthy, pay their fair share of tax. I’ve always agreed with the line that legal tax avoidance is perfectly sensible and part of good Financial Planning. After all an ISA or a pension is a way of avoiding tax with good outcomes for the nation as a whole.

It's not an scam to pay only the tax that is due but it is a responsibility to pay your fair share of tax.

I have no time for tax dodgers and people who deliberately shift assets around the globe or into artificial vehicles just to avoid paying any tax at all. These are the cheaters in life and I understand why Ms Reeves is after them as some will indeed by non-doms.

I suspect Chancellor Rachel Reeves has been wrangling with all these issues over the past few weeks.

In her Budget she announced, with little surprise, a widely-expected crack down on non-doms. Both main parties have announced regular attempts to crack down on non-doms over the past few years, often followed with little real success or an admission that it's not easy. Usually they intermingle efforts to crack down on non-doms with efforts to hit tax dodgers. They are not the same thing.

Ms Reeves may have assumed that cracking down on non-doms, as she did in her Budget, would nudge many of them to pay more tax and stay here. Sadly that doesn’t appear to the case.

By all accounts we’ve seen an exodus of millionaires in the past year with 10,800 quitting the UK, up 157% on 2023, according to the Times. That may also be a portent of what’s to come and that would be bad news. A huge exit of wealth creators is not a good look.

Ms Reeves may have forgotten that these non-doms, who are living here perfectly legally, have passports and can live virtually anywhere. It’s even easier than it was with many jurisdictions selling citizenships to anyone with the cash. So Ms Reeves may have very few non-doms left to try and tax and that’s a problem. 

One interesting aspect of all this is that many non-doms are, apparently, particularly worried about the IHT changes planned by Ms Reeves which could see the tax benefits of wealth transfer in the UK undermined.

In our report this week, Marc Acheson, global wealth specialist at Utmost Wealth Solutions, put it succinctly when he said: “Many of our clients have been exploring other jurisdictions in the EU and UAE. This community would rather not leave the UK and contribute significantly to the Exchequer, so any review of those changes, particularly with reference to the erosion of IHT protections on existing settlements, would be welcome.”

With all this in mind, it was no surprise Ms Reeves announced in Davos this week she was having a bit of a rethink. 

Ms Reeves may be right to try and pull a few more feathers from the golden goose but killing the goose is a never wise move.

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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days.  Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Follow @FPT_Kevin >Top Tip: Follow Financial Planning Today on Twitter / X @_FPToday for breaking news and key updates