Spring budget: Jeremy Hunt told scrapping non-dom tax status would leave ‘country worse off’

Chancellor Jeremy Hunt is considering scrapping the non-dom tax status to fund pre-election tax cuts at the spring budget.

Non-domiciled status allows foreign nationals who live in the UK, but are officially domiciled overseas, to avoid paying UK tax on their overseas income or capital gains.

The move is reportedly on a list of revenue-raising options drawn up for the chancellor, after economic estimates left them with less money or “fiscal headroom” than expected for pre-election tax cuts.

Abolishing the non-dom tax status would raise an estimated £3.6 billion a year

However, Conservative MPs, including Hunt, have long defended the non-dom arrangements.

In November, the chancellor suggested he did not know how much money scrapping the tax status would raise. Hunt said he would rather the super-rich stayed “and spent their money here”.

If Hunt opted to scrap the non-dom tax status he would be poaching one of Labour’s most popular policies. 

Shadow chancellor Rachel Reeves has said abolishing the tax break would fund its plans to expand the NHS workforce.

According to polling from More in Common, scrapping the non-dom tax status tops the list of policies Conservative-to-undecided vote switchers want to see in the Labour manifesto. 

However, former Conservative cabinet minister Sir John Redwood has warned Jeremy Hunt against scrapping non-dom tax status.

Sir John said such a move would result in wealthy people moving abroad and while it might be “popular” it would actually “make the country worse off”.

He posted on X/Twitter this morning: “I agree with the Chancellor who said he wanted the rich to stay here and to spend their money here. It is easy to do popular things that make the country worse off.”

He added: “There is plenty of scope to cut taxes. Recapture the big loss in state  productivity. Stem the losses of the nationalised industries. Help more people into work. Save on the housing budget with fewer low wage migrants. Use  the big fall in debt interest as inflation tumbles”.

Politics.co.uk is the UK’s leading digital-only political website, providing comprehensive coverage of UK politics. Subscribe to our daily newsletter here.