HMRC 'reconsidering' crackdown but 'won't abandon it completely'

The Labour Party Chancellor, who will deliver her Autumn Budget on Octobrt 30, says the Treasury will be ‘pragmatic, not ideological’.

Rachel Reeves is reportedly set to "reconsider" an end to non-dom tax status over a worrying OBR forecast. The Labour Party Chancellor, who will deliver her Autumn Budget on Octobrt 30, says the Treasury will be ‘pragmatic, not ideological’.

It comes amid claims the policy would not raise the predicted £2.6bn. A government official told the Financial Times: “We are looking at the details of our proposals. We will be pragmatic, not ideological. We won’t press on regardless, but we are not going to abandon this completely.”

Treasury officials feared the spending watchdog was due to conclude the policy would fail to raise any money, because of the impact of super-rich non-domiciles leaving the UK. Reeves is now reconsidering the plans, according to multiple reports.

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Andy Haldane, a former chief economist at the Bank of England, said earlier this week that there should be “cause for pause” on the government’s plan. A Treasury spokesperson said: “These reports are speculation, not government policy. The independent Office for Budget Responsibility will certify the costings of all measures announced at the budget in the usual way.

“We are committed to addressing unfairness in the tax system so we can raise the revenue to rebuild our public services. That is why we are removing the outdated non-dom tax regime and replacing it with a new internationally competitive residence-based regime focused on attracting the best talent and investment to the UK.”

Haldane said it was reasonable that Ms Reeves wanted to close the loophole for non-doms but that ministers should think carefully if the measure would not raise any revenue and consider what it would do for business confidence. “Does that make it more or less likely people would park their money, set up their businesses here and therefore generate growth? For me, that’s the meta question we’d ask ourselves and answer in the budget,” Haldane told LBC.

He said business confidence had been “heading south over the last six weeks or so”, a trend that Labour insiders see as a symptom of uncertainty before the budget in October.