UK Weighs Global IHT Rule for Non-Doms After Backlash

The UK government is reportedly reviewing its decision to apply inheritance tax (IHT) to global assets held by resident non-domiciled individuals, following a wave of criticism and concern from the wealth advisory sector.

The IHT move was part of a broader overhaul announced last October, which included replacing the long-standing non-dom regime with a new Foreign Income and Gains (FIG) system. Under the new approach, global assets, including those held in trusts, would fall within the UK IHT scope.

Since the announcement, wealth managers and economists have warned that the changes are driving wealthy residents to leave the UK, with many relocating to more favourable jurisdictions such as Portugal, Italy, and the UAE.

Key Concerns Behind the Policy Reversal

• A growing number of wealthy individuals are leaving or planning to leave
• Critics say the policy could reduce tax revenue rather than increase it
• The FIG system has not attracted new interest from the non-dom community
• Removing IHT protections for trusts sparked backlash due to lack of consultation

Outlook: Reversal May Come Too Late

While a policy reversal may soften the political fallout, many in the wealth community believe the damage is already done. The UK’s international reputation as a stable destination for global investors has been weakened, and confidence in the government’s handling of the issue remains low.

There are now calls for a more competitive, long-term solution, one that keeps the UK attractive to international talent and wealth without undermining trust or stability.