Jeremy Hunt is apparently considering scrapping the tax rules which allow wealthy foreigners living in the UK but who are officially “domiciled” in their own countries to cut their tax bills.
The so-called “non-dom” status means that they do not pay UK tax on money they earn abroad, potentially saving them millions of pounds in tax.
The Chancellor could end the scheme - which is estimated to cost the Treasury around £3.2 billion a year - in next week’s Budget as he tries to find enough cash to pay for pre-election tax cuts.
The move would be politically explosive because Labour has already said it would end non-dom tax status if it forms the next government.
Shadow chancellor Rachel Reeves has said Labour would spend the money raised on, among other things, improving the NHS.
But it would also open the Tories up to accusation of hypocrisy given how critical senior party figures - not least Jeremy Hunt himself - have previously been of the policy.
In November 2022, shortly after be became Chancellor, he told Radio Four’s Today programme: “These are foreigners who could live easily in Ireland, France, Portugal, Spain – they all have these schemes. All things being equal, I would rather they stayed here and spent their money here.”
He added: “I’m not going to do anything that’s going to damage the long-term attractiveness of the UK, even though it gives easy shots to opposition parties. I think it would be the wrong thing to do in terms of creating jobs in the UK.”
“I’m not going to do anything that’s going to damage the long-term attractiveness of the UK, even though it gives easy shots to opposition parties. I think it would be the wrong thing to do in terms of creating jobs in the UK”
Just last year, Rishi Sunak - whose Indian-born wife Akshata Murty has personally benefited from non-dom status in the past - attacked Keir Starmer over Labour’s plans at prime minister’s questions.
He said: “He talks about this non-dom thing. I think he’s already spent the money that he’s claimed he’s raised on five different things. Because it’s the same old Labour party – they’re always running out of other people’s money.”
The Tories’s opposition to scrapping non-dom tax status is also a longstanding position.
When then Labour leader Ed Miliband announced plans to scrap it in 2015, George Osborne - who was chancellor at the time - said it would “cost our country hundreds of millions of pounds in lost tax revenues and lost investment”.