Financial Planning and tax experts have welcomed comments this week from Chancellor Rachel Reeves at the Davos World Economic Forum that she may soften a Budget crackdown on non-dom individuals.

Follow her Budget move in October to scrap non-dom status many experts predicted large numbers of wealthy non-doms would exit the UK.

Recent figures suggest many millionaires have left the UK in the last 12 months.

According to recent report in the Times, the UK has seen 10,800 millionaires leave the country in the past year, up 157% on 2023.

Ms Reeves' latests comments in Davos suggesting a potential softening of her hard line have been welcomed by experts as a sign she is re-thinking her plans and may provide a longer transition period or dilute the ban.

Marc Acheson, global wealth specialist at Utmost Wealth Solutions, said: “The measures announced at the Budget made the UK far less attractive to non-doms and created the perfect storm of many leaving and less coming in.

“The replacement of the current remittance basis with the new 4-year foreign income regime encouraged the wrong type of behaviours and gave little incentive for people to come to the UK and establish long-term roots. 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.”

Jonathan Riley, partner and head of private wealth at law firm Fladgate, said: “Increasing the attractiveness of bringing money to the UK is of course welcome - but the change that is driving many away is (after 10 years’ residence) being liable to inheritance tax at 40% on your worldwide estate. This is easy to avoid – you just leave the UK – and they are leaving now. 

"Global mobility means people can alter where they live and where to invest with agility; we need a smart pro-growth tax personal regime that welcomes the internationally wealthy and is predictable, and this is not it.”

Sean Cockburn, partner at accountants and Financial Planners Forvis Mazars, said the potential change of heart was welcome but the move could cause further instability.

He said: "The Chancellor’s recent comments during the World Economic Forum in Davos suggest we can expect some updates to the 2024-25 Finance Bill, perhaps in reaction to reports of an exodus of wealthy individuals from the UK.

"As welcome as revisions might be for non-doms, these new rules are due to take effect from April 2025 and any changes to the incoming regime at this stage will cause further uncertainty with little time for those affected to react. To be able to plan efficiently and effectively, stability is also needed."

Carol Katz, partner in the private wealth and tax group at law firm Mishcon de Reya, said: “In terms of the impact of the current proposed rules on the internationally mobile, we have seen an increase in the number of enquiries from existing and new clients who are looking to relocate out of the UK: the departure lounge is very much fuller than arrivals at present.

"Expanding the temporary repatriation facility could encourage more people to stay in the UK as the reduced tax rate (either 12% or 15%, depending on the year in which it is designated) is a significant carrot with which to encourage people to bring funds here to settle for the long term. Our clients would want to see the detail before changing their plans and time is running out. 

“The new regime will be attractive to people looking to stay in the UK for only a short period in order to take advantage of four years of 100% tax relief on their foreign income and gains. However, four years is a short time to base a decision to relocate a family, with many people looking at Italy, Switzerland and Dubai as alternatives to the UK.” 

Mauro De Santis Bo, partner at GSB Wealth, said: "The proposed softening of the non-dom rules is likely aimed at preventing the loss of high-net-worth individuals who contribute significantly to the UK’s economy. By extending the temporary repatriation facility to three years and slightly lowering the tax burden during this period, the government is sending a signal that the UK remains a welcoming place for global wealth.

"Although this may look like it is going to help retain wealthy individuals who might otherwise move their funds elsewhere, I believe that is only helping those non-doms that are already thinking of staying and they have been lobbying intensively over the past months to make the new rules slightly more favoruable for them."