Is the UK Government Rethinking Its Stance on Non-Dom Inheritance Tax?
Speculation is growing that Chancellor Rachel Reeves may reconsider aspects of the new inheritance tax rules affecting non-domiciled (non-dom) individuals — particularly the 40% tax now applied to global assets. This potential reversal comes amid mounting pressure from financial stakeholders and a noticeable slowdown in London’s prime property market.
Before the Labour government took office, it projected that closing tax loopholes for non-dom trusts could raise £430 million annually. However, the Office for Budget Responsibility (OBR) now expects the actual figure to be closer to half that amount.
The introduction of inheritance tax on worldwide assets for non-doms — effective April — has reportedly led to a sharp decline in activity in the high-end property market, with many wealthy individuals either leaving the UK or reconsidering plans to invest. While many have held onto their London homes, they’ve opted to rent them out or leave them for occasional use, signalling hope that policies might shift.
Meanwhile, the Treasury defends the new residence-based tax regime, calling it simpler and fairer, while emphasizing that the UK’s capital gains tax rate remains lower than in any other G7 European country.
Still, experts believe a potential softening of the inheritance tax rules could bring positive momentum back to the market. Will Watson of The Buying Solution noted that this moment — before the Autumn Budget — could present an excellent opportunity for buyers, especially if the government reduces the tax burden later in the year.
What’s Next?
While no formal changes have been announced, the political tone is shifting. If a U-turn on the inheritance tax for non-doms does happen in the Autumn Budget, it could signal a broader rethink of how the UK treats international wealth — and potentially re-establish London as the go-to destination for global investors.
