Farage warns Brits will pay for Labour’s £1 billion Tax Black Hole
Labour’s controversial clampdown on wealthy foreign residents is triggering alarm bells across the UK economy, as new analysis warns the move could blow a nearly £1 billion hole in tax revenues and drive thousands of millionaires out of the country.
“This is a disaster,” said Nigel Farage, leader of Reform UK. “Our tax revenues will fall off a cliff.”
At the center of the storm is Rachel Reeves’ planned overhaul of the “non-dom” tax regime. Set to take effect on April 6, Reeves’ policy aims to end what she calls an unfair loophole—allowing foreign-born millionaires living in the UK to avoid paying British tax on overseas income and gains.
Originally hailed as a bold reform to level the playing field, the Chancellor’s move has ignited fears of a mass exodus of high-net-worth individuals, and potentially billions in lost economic value.
“I have promised to abolish non-dom status once and for all,” Reeves had declared.
But now, reality is biting back.
The Government’s own figures suggest that more than a quarter of non-doms could flee, with wealth management firm Evelyn Partners warning that the departure rate may soar even higher. Their projections suggest that a 32% exit rate could leave the Treasury short by a staggering £900 million annually by 2029/30.
The backlash is gaining momentum, with Labour rebels, industry insiders, and opposition parties warning that the policy could backfire spectacularly. Among the potential high-profile exits is Indian steel magnate Lakshmi Mittal, who has reportedly begun “exploring his options” ahead of the tax shake-up.
The move comes at a politically sensitive time. In her Spring Statement, Reeves also announced plans to cut £4.3 billion from Britain’s soaring welfare budget—a decision that drew immediate criticism after impact assessments showed that 250,000 people, including 50,000 children, will be pushed into poverty.
The optics? Not great.
On one hand, Labour is clamping down on millionaires. On the other, it’s slashing benefits for struggling Brits—while risking an economic fallout that could ultimately hurt the very taxpayers it’s trying to protect.
“The exodus of talented wealth creators is fast turning into a crisis for the Government,” said Shadow Business Secretary Andrew Griffith. “Labour must stop its war on wealth creators or it will be average taxpayers who pay the price.”
Countries like Italy, Portugal, the UAE, and Switzerland are reportedly ramping up their efforts to attract Britain’s disgruntled elite, offering more attractive tax environments just as Reeves begins her clampdown.
Even the Treasury seems to be quietly acknowledging the risk. In a late-stage move, it floated a tweak to the Temporary Repatriation Facility—a three-year scheme offering discounted tax rates to former non-doms bringing assets back to Britain.
But despite the growing alarm, a Treasury spokesperson insisted this adjustment won’t dent its projected £33.8 billion revenue boost over five years.
Still, with UBS estimating up to 500,000 wealthy people may leave the UK by 2028, many are wondering: Is Labour’s “war on wealth” about to backfire spectacularly?
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