Reeves forced to U-turn on key tax pledge as people refuse to pay in latest rookie error

Running things is harder than it looks and Reeves is making one rookie error after another. She kicked off her tenure with the disastrous decision to scrap the Winter Fuel Payment, in a move that instantly turned millions of pensioners and poverty campaigners against the Labour Party.

I still can't believe she did that.

But Reeves is so immersed in her policy papers, she can't see how her plans will pan out in the real world

And that's only the start.

Yesterday the penny dropped about another big tax decision. It turns out this one will cost the nation £1billion more than it actually raises – exactly as the Express has been warning for months.

It's yet another reality check for Reeves. She's on a rapid learning curve, and taxpayers are footing the bill.

Yesterday I reported that Labour's flagship policy to scrap a tax break for wealthy foreigners known as non-doms has run into stormy weather.

It won't be the last Reeves plan to run aground on the rocky shore of reality.

The term non-doms – short for non-domiciled – relates to someone who lives in the UK but whose permanent residence is abroad.

To qualify for non-dom status, people have to pay up to £60,000 a year to HMRC depending how long they've lived here.

They also pay UK tax on all of their UK earnings, plus other levies such as council tax, VAT and so on.

If they run a UK-based business they have to pay all the usual taxes, as will their employees.

That isn’t enough for Labour’s class warriors. They want non-doms to pay tax on all their global income and assets as well.

Crucially, this will include charging inheritance tax on everything they own in the world, which could ramp up their bills by 1,000%.

That's the bit non-doms really fear.

To nobody's surprise – unless your name is Rachel Reeves – they aren't going to stick around and watch HMRC swallow a lifetime of international wealth.

They're jumping into their private jets, hoisting the anchors on their yachts, and clearing off to Monaco, Italy, Dubai or anywhere with a warmer fiscal welcome.

Naturally, the class warriors say good riddance. To a degree, I get that. Given the level of poverty in the UK, it's hard to feel sorry for the super rich.

But without them, that £22billion black hole will get even harder to plug.

Reports suggest the Treasury is suddenly getting cold feet. Reeves may now axe the plan to impose IHT on non-doms’ global assets.

The Treasury denies back-pedalling but its language has subtly changed.

It now says it’s “removing the outdated non-dom tax regime and replacing it with a new internationally competitive residence-based regime focused on attracting the best talent and investment to the UK”.

That doesn’t sound like class war to me, but there’s still a problem.

Non-doms have been planning their exits ever since it became clear Labour would win the election. They're unlikely to reverse now. So we risk losing their tax receipts anyway, while earning less from those who stay.

Even if Reeves does U-turn, the damage has been done. Which is lose-lose for taxpayers and the UK economy. It's not easy, running things.