How will Labour fill the non-dom shaped hole in their tax plans? Brace yourself.
Cast your mind back to the Spring and early Summer of this year when the election campaign was underway.
It seemed the Tories were announcing a new policy every day, from the return of National Service to inventive new ways of protecting pensioners’ incomes, Conservatives filled the airwaves with ideas, policies and announcements.
In the end, it didn’t get them very far.
Labour, in contrast, chalked up a huge election victory and did so without ever getting into the detail of what it would do in government. Their campaign messaging was painted in broad brush strokes, with the party studiously avoiding anything close to granular policies or wide reform agendas.
This was deliberate, and a debate now rages as to whether it was wise or reckless.
We were, to be fair, given warning of some specific tax rises – not least VAT on private schools and that other go-to favourite for Labour – taxing the non-doms.
After Jeremy Hunt began the process of ending non-dom perks, Labour’s policy became “closing the Tory loopholes in the non-dom regime” – and this, we were told time and again, would pay for breakfast clubs across state schools.
It doesn’t get more elegant than that; tax the global mega rich in order to feed hungry kids.
Unfortunately, breakfast may not be on the menu after all.
It seems that Treasury officials, having sat down with their new ministers, are now concerned that Labour’s plans to reform the way non-doms are taxed might lead to… no non-doms, and no money.
As things stand, the UK’s 17,000 or so non-doms contribute about £1.5bn in tax from economic activity undertaken here.
But in the words of tax expert Robert Salter from Blick Rothenberg, Labour’s “plan of increasing the tax take by scrapping the non-dom regime is likely to fail.. many non-doms are looking at leaving the UK rather than pay increased taxes after April 2025.”
Salter’s conclusion should alarm those of us left behind: “Without their expected tax income from non-doms, the Government will have to look elsewhere. Their only real option will be to increase taxes on middle income earners, despite their pre-election promises not to do this.”
With precisely a month to go until Labour’s first Budget, it seems reality is catching up with them.
And it’s about to catch up with the UK’s middle-earners, too.