The UK is facing a potential exodus of wealthy individuals, specifically non-domiciled residents, due to proposed changes to their tax status. Henley & Partners forecasts an "unprecedented" net loss of 9,500 millionaires this year, second only to China, and significantly higher than the 4,200 who left in 2023. This is largely attributed to the looming threat of the non-dom regime being abolished, a move that could affect nearly 70,000 individuals, including business owners, heirs, City bankers, lawyers, and consultants. While some studies suggest the mobility of the wealthy in response to tax changes is lower than often believed, others warn that the departure of the very richest, particularly those paying the $60,000 remittance basis charge, could significantly impact tax receipts.
Non-doms currently pay UK tax only on their UK income and capital gains, and on foreign income or gains if they bring them into the country. After residing in the UK for at least seven of nine tax years, they pay a $30,000 annual charge, increasing to $60,000 after 12 of 14 tax years. In the 2021/22 tax year, 68,800 non-doms contributed $8.5 billion in UK personal taxes, with 2,100 paying the remittance basis charge in 2020/21. Critics of abolishing the non-dom regime argue it could make the UK less attractive compared to other countries that offer tax-privileged regimes, potentially leading to a significant loss of wealth and economic contribution.
While some high-net-worth individuals are considering leaving, others, like John Caudwell, a UK billionaire, state that a moderate increase in taxes would not prompt them to relocate. However, some financial advisors report increased interest from clients in exploring options to leave the UK due to the uncertain tax landscape. The London School of Economics suggests that the rich are unlikely to relocate for tax reasons alone, especially those in major cities, citing the lack of cultural appeal in many tax havens. Nevertheless, the UK tax system is heavily reliant on a small number of super-taxpayers, with the top 1% paying 30% of all income tax revenues, making the potential departure of these individuals a significant concern for the UK economy.
