Millionaire Exodus: UK's Tax Reforms Spark Record Departures to Global Destinations
Number of Millionaires Migrating: Britain lost a net total of 10,800 millionaires to migration in the last year, marking a 157% increase from 2023.
Comparison Globally: This migration rate positions Britain as losing more wealthy residents than any other country in the world, except for China.
Destination Preferences: The UK's wealthiest individuals primarily relocated to other European countries like Italy and Switzerland, and the United Arab Emirates.
Tax Changes Impact: Changes to the UK tax regime, particularly concerning non-domiciled residents, have prompted this exodus. From 2026, companies valued over £1 million will face a 20% inheritance tax when passed to the next generation.
Economic Contribution of Non-Doms: Non-domiciled residents in the UK, who have been significantly affected by the tax changes, contributed on average £800,000 in VAT in the last tax year and £890,000 in stamp duty over the previous five years.
Future Economic Impact: The Adam Smith Institute estimates that by 2035, the non-dom reforms could reduce the UK economy by £1.3 billion and lead to over 23,000 job losses by 2030.
Reaction and Adjustments: Many non-doms are considering or planning to leave the UK due to the tax changes, with estimates suggesting that between 12% and 25% may relocate.
Philanthropic Contributions: The surveyed non-doms have invested an average of £118 million in the UK since arriving and donated an average of £5.9 million to good causes.
Government Revenue Projections vs. Reality: While the government predicts that ending the non-dom regime will raise £2.5 billion a year, Oxford Economics argues that it could cost the exchequer nearly £1 billion a year due to the exodus.
Proposed Tax Reforms: There is a suggestion for a tiered tax regime that could potentially raise more tax revenue by charging non-doms a fixed fee depending on their wealth.
The UK has seen a record number of millionaires leave the country, driven by new tax reforms implemented by the Labour government under Keir Starmer. The past year alone witnessed an exodus of approximately 10,800 millionaires, a staggering 157% increase from the previous year, marking one of the highest rates of wealthy individual migrations globally, second only to China.
The migration of these individuals is mainly in response to the Labour government's stringent tax policies, particularly those affecting non-domiciled residents. These policies have caused considerable unrest among the affluent and prompted significant economic implications for the UK.
Historically, non-domiciled residents have substantially contributed to the UK economy, not just in terms of direct taxation but also through indirect economic engagement. Last tax year, these residents contributed an average of £800,000 in VAT alone. The recent tax changes, however, are poised to dismantle this revenue stream. The Adam Smith Institute has forecasted that by 2035, the non-dom reforms could shrink the UK economy by £1.3 billion and lead to over 23,000 job losses by 2030.
The primary destinations for these migrating millionaires include European countries like Italy, Switzerland, and the United Arab Emirates. These regions offer more favourable tax regimes and have become attractive havens for those seeking relief from the UK's increasing tax pressures.
One of the most contentious reforms is the alteration of the Business Property Relief (BPR), which, from 2026, will impose a 20% inheritance tax on business properties valued over £1 million when passed to the next generation. This change has sparked significant concern about the future of family-owned businesses in the UK, which traditionally rely on BPR for generational continuity.
Moreover, the Treasury's expectation to raise an additional £2.5 billion a year through these tax reforms starkly contrasts projections by Oxford Economics. They argue that the actual impact could be a loss of nearly £1 billion annually due to the exodus of these high-net-worth individuals, undermining the supposed financial benefits of these reforms.
In response to the upheaval, there are calls within the financial and business communities to introduce a tiered tax regime for non-doms. This proposed system would charge a fixed fee based on individual wealth and is suggested as a compromise that could enhance tax revenues while maintaining the UK's attractiveness as a global financial hub.
As the UK continues to navigate these challenging economic waters, the full impact of these tax changes will unfold over time. The ongoing millionaire migration highlights the delicate balance required in tax policy – a balance that must support the nation’s economic health while ensuring fairness and competitiveness on a global scale.
