Prime Minister Keir Starmer is understood to be preparing to reject proposals for new wealth taxes after his senior adviser Liz Lloyd cautioned that recent levies targeting the rich could be harming economic growth.
Lloyd, the Prime Minister's director of policy delivery and former deputy chief of staff to Tony Blair, has expressed concerns about the consequences of abolishing non-dom status, The Telegraph reports.
Analysts have claimed that the UK faces an unprecedented wealth exodus, with projections indicating 16,500 millionaires will leave the country this year - the largest such departure from any nation globally.
This mass departure follows reforms to non-dom status, with tax receipts now expected to fall significantly below Government projections.
Keir Starmer is reportedly set to be blocking taxes on wealth
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Critics of the Treasury's raid on non-doms have cited that wealthy individuals leaving may also relocate their businesses and investments, potentially taking jobs with them.
Starmer has previously warned that taxing the wealthy is not a "bottomless pit" and stressed the importance of economic growth.
He told Parliament in March: "We have raised money – the energy profits levy, taxing non-doms and air passenger duty on private jets.
"But this isn't a bottomless pit and we must kick-start growth to get the economic stability that we need."
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HMRC receipts are at risk of slipping due to the changes to non-dom rules
PALloyd appears to have prevailed in an internal Downing Street battle that could see more left-wing members of the Prime Minister's team marginalised.
The Prime Minister plans to bolster his economic team by hiring a new political adviser to fill a role vacant since Ravinder Athwal's departure.
This appointment would give Number 10 greater influence over future budgets, countering Treasury dominance.
One former Government adviser said: "There is always a concern that the Treasury holds all the cards in budget negotiations, meaning they set the rules and terms of engagement. If No 10 has a political appointee as an economic adviser, they can counter that."
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Experts have warned that high earners are leaving the UK
GETTYTax expert Eamon Shahir, founder of Taxd, warned that the Autumn budget changes have triggered "unprecedented numbers of wealthy people leaving the UK in search of more favourable tax environments".
He argued that wealthy individuals contribute beyond direct taxation: "Even if they are not contributing directly through taxes, their wealth will 'trickle down', creating more jobs and business opportunities."
Shahir added: "The economic boost from these HNWIs will generate more tax revenue for the government through Income Tax and National Insurance from their businesses and employees."
He noted "a fairly negative sentiment around the UK at the moment" that could deter new wealthy foreigners from relocating to Britain.