Andy Haldane, a former chief economist at the Bank of England, has urged caution regarding the government’s plan to close tax loopholes for wealthy foreigners, following concerns that the reform may not generate revenue, as reported by The Guardian.
Haldane advised ministers to carefully consider its potential impact on business confidence if it fails to raise funds. Labour initially intended to use revenue from non-doms to invest in school breakfast programs and increase NHS appointments. However, Treasury officials now fear that the Office for Budget Responsibility (OBR) could assess the measure as a financial loss, as it may drive non-doms out of the UK, especially due to inheritance tax changes.
Despite these concerns, Labour still believes the reform could generate £2.6 billion over a full parliamentary term, with an estimated £1 billion raised in the first year. A Treasury source confirmed they would consult the OBR, emphasising that revenue generation remains the top priority.
Also, Chancellor Reeves recently outlined a package of reforms to improve the UK’s tax system to help fix the foundations of the UK economy. The Treasury is considering potential increases in capital gains tax, inheritance tax, and other pension-related levies to bolster public finances.
In the 2022-23 tax year, 369,000 individuals paid capital gains tax, with their combined profits totalling £80.6 billion. The tax generated £14.4 billion, a 15% decrease from the previous year, largely due to a drop in property prices.
