Labour to close inheritance tax loophole for non-doms
LABOUR will close an inheritance tax loophole for non-doms and target tax-avoiders to pay for its spending commitments on schools and the NHS.
Rachel Reeves will make the announcement today, with the money raised set to fill a funding hole created when Jeremy Hunt, the Chancellor, adopted Labour’s plans by banning non-dom tax status, which allows some foreigners in the UK to avoid paying tax.
Labour will go further and stop current non-doms from being able to move their money into an offshore trust before the ban comes into place in April 2025 and avoid paying inheritance tax.
The party would also remove a 50 per cent discount on the amount non-doms have to pay in tax in the first year of the new ban, a measure aimed at easing the impact of the change.
A Labour source said: “They’ve done the semi-skimmed version, we’re doing the full-fat version.”
The money raised will pay for commitments made on improving the health service and providing free primary school breakfasts for children.
A second money-raising drive will involve measures designed to help HMRC do a better job of getting tax payments that are owed but never made.
It includes hiring up to an extra 5,000 compliance officers, digitising the tax office and adopting a greater use of artificial intelligence at HMRC.
The non-dom inheritance tax raid is estimated to raise £430 million a year. Scrapping the 50 per cent discount raises £600 million, though that would be a one-off saving.
The savings are estimated by Labour to start at £700 million a year and rise within five years to £5 billion a year.