Chancellor, Rachel Reeves, is reportedly considering reversing the decision to charge non-doms inheritance tax (IHT) on worldwide assets, as the government seeks to stem the exodus of wealthy individuals from the UK.

The Financial Times reported that government officials and financiers briefed on the discussions said the Treasury was reviewing the changes.

Global assets have been subject to a 40 per cent IHT charge since the changes came into force in April, and this was the element of the abolition of the non-dom regime that the government felt was causing the most issues.

One official told the Financial Times that the Treasury was planning to alter the IHT regime for non-doms if it would improve the UK’s international competitiveness, while a senior financier said the government was looking to find a way of "backtracking without backtracking".

The abolition of the non-dom regime has seen swathes of high net worth individuals leaving or planning to leave the UK in search of more favourable tax regimes.

The April changes were announced in the October Budget, with the concept of domicile status from the tax system removed and replaced with a ‘residence-based regime’, which included ending the use of offshore trusts to shelter assets from IHT.

However, the exodus of wealthy individuals and lobbying by the City of London have reportedly resulted in the government looking to revisit the reforms.

“Whilst any changes that can make the UK more internationally competitive are welcome, the real challenge now is restoring trust and stability, particularly as so many in the non-dom community have already left or are still planning to leave,” commented Utmost Wealth Solutions global wealth specialist, Marc Acheson.

“The other challenge is how the government plans to balance or navigate any reversal of changes on trusts previously settled by former non-doms, while at the same time proposing to extend IHT to business property, agricultural assets, and even pension funds for others.”

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