TheChek News Flow

Rachel Reeves to soften UK non-dom tax reforms

Chancellor tells Davos crowd that government had been ‘listening to concerns’

Rachel Reeves is set to make a change to the UK government’s crackdown on non-domiciled residents in an attempt to allay concerns about the tax reforms announced in October’s Budget. 

The chancellor told a fringe event at the World Economic Forum in Davos on Thursday that the government would soon table an amendment to its own finance bill. 

This will enable easier access to the temporary repatriation facility, which allows non-doms to bring foreign income and gains made before April 2025 into the UK and pay tax at a discounted rate of 12 per cent in the 2025-26 and 2026-27 tax years, rising to 15 per cent in 2027-28 — compared with the maximum income tax rate of 45 per cent. 

The change planned by the government would make it easier for certain funds to access the facility’s flat tax rates. But while the measure may be useful for some non-doms, it is unlikely to move the dial for many.

Reeves said at The Wall Street Journal’s Davos event on Thursday the government had been “listening to the concerns that have been raised by the non-dom community”, responding to a question about an increase in the net number of millionaires leaving the UK in recent months.

Jonathan Reynolds, business secretary, later confirmed the planned change, first reported by The Times, telling journalists in the Swiss mountain resort: “There is a tweak to the finance bill . . . when you’re changing a tax regime, people will want to know, and there’ll be some uncertainty there, so we’ve got to get that message out.”

Reeves announced in the Budget that she was abolishing the non-dom regime, which allows UK tax residents whose permanent home or “domicile” is overseas to avoid paying British tax on their foreign income or capital gains for 15 years. 

It will be replaced from April 6 2025 by a four-year residence-based scheme to offer “internationally competitive arrangements for people coming to the UK on a temporary basis”.

Downing Street said the change would not lead to a fall in the tax take from replacing the non-dom regime, and the Treasury still expects to raise £33.8bn over the next five years from the reforms.  

Non-doms have been most concerned about changes to inheritance tax on existing trusts, with the issue often mentioned as the key factor driving them to leave the country.

Rachel de Souza, tax partner at RSM UK, said that while an increase to the temporary repatriation facility was “a good move” it is “woefully inadequate” to prevent wealthy non-doms from leaving the UK.

“The way to stem this exodus would be to maintain the exemption from IHT to offshore trusts but also reverse the proposed changes to agricultural and business property relief which impacts the farmers and entrepreneurs.”

Robert Brodrick, a partner at law firm Payne Hicks Beach, said: “It’s reassuring to see that they are at last responding to the concerns of the many people who are affected by this, but I don’t think this is going to be enough to stem the tide . . . It’s helpful but the inheritance tax exposure is the biggest nail in the coffin.”

The chancellor also said on Thursday she wanted to allay concerns from countries including India that the rules changes would not affect double-taxation agreements: “That’s not the case: we are not going to be changing those double-taxation conventions.”

A Treasury figure said: “We’re always interested in hearing ideas for making our tax regime more attractive to talented entrepreneurs and business leaders from around the world to help create jobs and wealth in the UK.”

Gapping down
In reaction to earnings/guidance:

Other news:

Gapping up
In reaction to earnings/guidance:

Other news:

Spotify founder’s body-scanning start-up valued at $1.7bn in new funding round

Daniel Ek’s body-scanning start-up Neko Health has raised $260mn in new capital to fuel expansion of its clinics to the US, as the Spotify founder aims to build what he called the Apple of healthcare.

Ek co-founded Neko in Sweden alongside entrepreneur Hjalmar Nilsonne, its chief executive, in 2018, financing the venture for its first five years through his investment firm Prima Materia.

“I think we have a shot of changing the biggest industry on earth and accomplish a win-win-win where we reduce costs for society, we reduce suffering and we can create a fantastic business,” Ek told the Financial Times.

“The companies we compare ourselves with are the Apples or Teslas of the world, but we’re applying it to a very different domain, which is healthcare.”

The start-up’s funding round announced on Thursday values Neko at $1.7bn, according to people familiar with the terms. The investment will help it expand to more countries, including the US, when it receives the necessary regulatory approvals.

The deal is led by Lightspeed Venture Partners, a backer of Elon Musk’s xAI, Stripe and Epic Games, with other investors including Lakestar, Atomico, General Catalyst and OG Venture Partners.

Neko’s first clinics launched in Stockholm in 2023, when it also raised $65mn from outside investors. It expanded to London last year, offering hour-long health check-ups that include high-resolution skin scans, blood tests and a doctor’s consultation for £299.

“We are now at an inflection point where we have proven that we can build an amazing experience and we’ve proven we can get it to work . . . in one of the most difficult markets, the UK,” Ek said.

Critics of preventive care companies say that they can generate “false positives” or alarm patients, which public healthcare services such as the NHS then have to pay to deal with.

Neko’s fee includes follow-up appointments to verify any potential problems that its initial scan detects.

Other preventive health scanning start-ups include Ezra and Prenuvo, while OpenAI chief Sam Altman has invested about $180mn into Retro Biosciences, which aims to extend human lifespan by a decade.

Unlike most other preventive health services, Neko has engineered much of its own diagnostic stack, which includes high-resolution imaging, cardiovascular assessment and blood tests, producing millions of data points.

Nilsonne said about three-quarters of the data generated by each scan came from its own medical devices, while other off-the-shelf equipment was also integrated into a system that was designed to run as many tests in as short a time as possible.

More than 90 per cent of customers opt to allow Neko to apply AI to the roughly 15 gigabytes of data produced in each scan, offering patients personalised insights and recommendations, while also helping the company to improve its algorithms.

“We are building up a much more comprehensive [health] data set than anyone else is doing,” Nilsonne said.

Ek compares Neko’s “vertical integration” to the way in which Apple and Tesla design many of their own components and tightly control their supply chains, from chips and batteries to software and services.

Like those companies, Neko can continuously improve not only its sensors and software, but the overall customer experience, which the founders see as key to attracting customers who would not otherwise want to pay for preventive care.

Neko has completed 10,000 scans to date and more than 100,000 people have signed up for its waiting list. The private company did not disclose any financial information, but Nilsonne said the group did not lose money on each scan thanks to the degree of automation involved, pointing to “very solid unit economics”.

Lightspeed partner Bejul Somaia, who is joining Neko’s board, said its level of repeat bookings and waiting list gave him a “high level of confidence” that the business model was working.

“The investment would have been much tougher for us — though probably I would still have done it because of the team — than if you were taking a total leap of faith on whether people actually want this,” he said.

Neko’s check-ups happen in a spa-like environment, bathed in pastel hues and soundtracked by soothing music, with a mixture of staff and voice-overs explaining each step of the process.

The results are presented immediately after the scan by a doctor, visualised on a 3D avatar of the patient’s body and benchmarking their health metrics against those of other Neko customers and clinical studies.

“We’re not selling a product, we’re selling an experience. This experience will keep on improving,” Ek said. “Where we are today, I like to believe that we will look back at this as the first iPod.”