UK non-dom tax changes spark wealth exodus

The UK is facing a mass departure of wealthy individuals as sweeping tax reforms set for April 2025 strip non-domiciled residents of key financial advantages. A recent survey by Oxford Economics reveals that approximately 80% of advisers expect non-doms to leave the UK in significant numbers, taking billions in investment and tax revenue with them¹. This couldn't have happened at the worst time, given the Office for Budget Responsibility (OBR)'s downgrading of the UK's economic growth forecast and subsequent need for increased tax revenue.

The Labour government is ending the remittance basis, meaning all UK tax residents will now be taxed on their worldwide income and gains. Non-doms will also face inheritance tax (IHT) on global assets after ten years of residency. While the government argues these reforms will boost tax revenue, it will likely be quite the reverse. A mass exodus of UHNWs will lead to a major hole in the public purse. Non-doms paid £8.9 billion in taxes in 2022/23, which is almost £500 million more than the previous year.² While not all will leave, most experts place the loss of revenue from non-doms at around £1 billion annually¹.

Where is the money going?

As the UK's appeal wanes, destinations like Dubai, Singapore, Switzerland, and Monaco are attracting departing non-doms. Dubai's zero income tax, Singapore's stable financial sector, and Switzerland's structured tax advantages are proving irresistible. Southern European countries, including Italy, Portugal, and Spain, also benefit from golden visa programs and tax incentives.

Impact on the UK economy

The exodus is already evident—10,800 millionaires left the UK in 2024, with numbers expected to rise sharply³. The property market is also under pressure, particularly in the £500,000 to £3 million range, where non-doms have been key buyers. Meanwhile, the government's four-year Foreign Income and Gains (FIG) regime, designed to attract new arrivals, is widely seen as ineffective, offering only temporary relief. While Rachel Reeves has suggested changes to FIG, it is difficult to see how improvements alone will turn the tide.

A self-inflicted crisis?

According to the survey, most respondents believe the UK is losing its competitive edge as a leading financial centre and is becoming less attractive for global wealth¹. If the government fails to provide greater tax certainty or competitive incentives, the UK risks losing its status as a premier wealth hub—while rival financial centres stand ready and keen to welcome its departing elite.

¹ Oxford Economics Report, Assessing the Impact of Proposed Reforms to the Non-Dom Regime, September 2024

² HM Revenue & Customs, Statistical commentary on non-domiciled taxpayers in the UK, July 2024

³ Henley & Partners, The Henley Private Wealth Migration Dashboard, June 2024