Many non-domiciled residents, or non-doms, are considering leaving the UK in response to proposed tax reforms, including abolishing non-dom status. Originally announced by the Conservative Government, Labour has since expanded the scope of these changes, including global inheritance tax liability with a 10-year reach even after leaving the UK.
The newly formed Foreign Investors for Britain (FIFG) commissioned Oxford Economics to assess the impact of these changes, which are expected to take effect in April 2025. The report suggests that up to a third of non-doms could leave within two years of the reforms. Accountants and financial advisers indicate that this figure could rise to 60% as more clients plan to depart.
According to the assessment, the 68,800 non-doms in the UK have an average income and gains of £21 million annually, though HMRC data shows the average income to be £370,000. The reform aims to generate an additional £2.7 billion annually by 2028/29, on top of the current £8.5bn.
Labour’s manifesto promises that the extra revenue will fund 40,000 more NHS operations, scans and appointments and increase HMRC enforcement. However, economists warn that the reforms may have the opposite effect, potentially reducing tax revenue as non-doms emigrate. The most pessimistic prediction is a £900m annual loss by 2029/30.
Additionally, 67% of survey respondents stated they would not have moved to the UK if these changes were already in place.
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