Britain’s finance minister Jeremy Hunt said he would abolish a so-called “non-dom” status that let residents, including those in European Union countries, avoid tax on overseas income.
He claimed such a move would raise £2.7 billion (€3.15 billion) a year – by adopting what had been an opposition Labour Party policy.
He also said in his budget statement on March 6 he was planning to introduce an extra tax on vaping products from October 2026 and would cut the rate of social-security contributions paid by 27 UK millions workers.
Non-domiciled status had been available to people who live in Britain but do not consider it their permanent home – allowing them to opt to pay UK tax only on income earned in, or transferred to, Britain.
Hunt said he would replace that with a system “both fairer and [that] remains competitive with other countries”, adopting similar language to Labour leader Keir Starmer, whose pledge to scrap it was a flagship policy ahead of a general election expected this year.
“The Government will abolish the current tax system for non-doms,” Hunt said, adding that new arrivals would still not be required to pay tax on foreign income and gains for their first four years of UK residency.
“After four years, those who continue to live in the UK will pay the same tax as other UK residents.”
Labour lawmakers had said the adoption of a key opposition policy would be humiliating for the governing Conservatives – but it could also cause headaches for Starmer’s party.
Under Labour’s previous plans, the abolition of the non-dom tax status was intended to raise funds for greater investment in the State-run National Health Service.
Hunt instead said he would use the money raised to fund tax cuts – meaning Labour may come under pressure to announce how it would now pay for its planned investment.
Labour has said its spending pledges will be fully funded but it has also promised not to raise taxes on working people or increase borrowing to fund day-to-day spending.
Hunt also said he was planning to introduce an extra tax on vaping products from October 2026, aiming to make the habit more expensive to deter non-smokers from take it up.
He said the Government would introduce a one-off increase in tobacco duty at the same time to maintain the financial incentive to choose vaping over smoking.
“To discourage non-smokers from taking up vaping, we are today confirming the introduction of an excise duty on vaping products from October 2026 and publishing a consultation on its design,” Hunt told the UK Parliament.
Vape products have been in use for more than 15 years and were introduced to help people stop smoking cigarettes.
Currently most vapes are subject to value added tax at the usual UK 20 per cent rate but there is no extra levy applied, as is the case for tobacco products.
“Because vapes can also play a positive role in helping people quit smoking, we will introduce a one-off increase in tobacco duty at the same time to maintain the financial incentive to choose vaping over smoking,” Hunt said.
Some e-cigarettes are taxed at a lower rate if classed as a medical product used for treating smoking addiction.
Also on March 6, Hunt said he would cut the rate of social security contributions paid by 27 millions British workers for a second time in under four months before a national election expected later this year.
He said the Government would reduce National Insurance Contributions (NICs) by 2 percentage points for employees and the self-employed, to help encourage people back to work and deliver what he called a high-wage, high-skill economy.
The latest cut, effective from April, would be worth about £450 (€526) a year for an employee and £350 for the self-employed, he said.
“We need a simpler, fairer tax system that makes work pay,” Hunt told parliament in his annual budget speech.
In November, Hunt announced a 2 percentage-point cut to the main rate for employees and a 1 percentage-point cut for self-employed workers.
Taken together, he said, the tax cuts were worth £900 to the UK average worker.
The new cuts mean employees earning more than about £12,600 pounds (€14,700) a year will pay 8 per cent in NICs on their earnings up to about £50,300 (€59,000), while self-employed workers would pay 6 per cent.
