Are the rich leaving the UK due to high taxes? Where the wealthy are going
Record numbers of millionaires are fleeing the UK amid rising taxes and the end of non-dom status. We reveal the top destinations for migrating millionaires
The non-dom tax regime was only scrapped a month ago but there are already estimates that more than 20,000 wealthy people could have been driven out of the UK as a result of the changes.
Plans to axe non-dom status were first put forward under the previous Tory government but Labour took on the changes when it came to power, essentially meaning more overseas earnings for wealthy people living in the UK will eventually be taxed here.
Chancellor Rachel Reeves has also said that those resident in the UK for at least 10 years of the past 20 would be subject to inheritance tax on a worldwide basis.
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The Treasury has cited figures from the Office for Budget Responsibility (OBR) that suggest the changes will raise £33.8 billion over the next five years.
But a report by a former Treasury economist, Chris Walker, suggests the government may have underestimated the number of people who would leave and therefore the gains by axing non-dom status.
Walker said the Treasury used research by Warwick University that focused on non-doms who had been resident in the UK for 15 of the past 19 years.
This, Walker said, has informed estimates that between 10% and 20% of non-doms will exit in total as a result of the changes.
The report said: “It seems reasonable that non-doms living in the UK for such a long time would have a strong attachment to the country and have developed strong ties, to the extent it would override tax considerations.
“The problem, however, is that the study applied this to the whole of the non-dom population to infer that very few non-doms would depart from the UK if they were similarly taxed.”
Walker said significant numbers of non-doms, particularly wealthier individuals, have either already left the UK or will leave soon, while other countries are changing their tax regimes to attract non-doms thinking of leaving the UK.
In an analysis for campaign group Land of Opportunity, he claims that 10% of non-doms have already left the UK.
Walker cites data from a Warwick University paper, used by the Treasury to formulate its policy, that shows there were 238,000 non-doms in 2018. So 10% would equate to 23,800 already leaving the UK.
Analysis by Henley & Partners shows that in 2024 alone, 10,800 high-net worth individuals left the UK.
The outflow was especially large at the top-end, with 78 centi-millionaires and 12 billionaires leaving the UK in 2024.
In terms of applications from UK nationals for alternative citizenship and residency, Henley & Partners said 2024 was a record-breaking year.
It saw a 57% increase in the number of applications from Brits versus the number who applied in 2023.
Why are the rich leaving the UK?
It is not just the end of non-dom status that is worrying people.
The UK tax burden is at record levels, making living in the country less appealing to those with lots of wealth.
Wealthy households have also been hit by frozen tax thresholds as well as falling capital gains and dividend allowances, reducing how much they can keep from their income and investment gains.
People earning above £125,140, face a 45% income tax rate, while the personal allowance is reduced by £1 for every £2 you earn above £100,000.
Meanwhile, those who take income from dividends have seen the allowance cut from £1,000 to £500 since April 2024, while it was £5,000 when first introduced in 2016.
Capital gains allowances have also halved since April 2024 to £3,000.
Many of those changes came in under the Tories but Labour has also announced changes affecting inheritance tax, private school fees, and employer national insurance contributions that will hit the wealthy. The government also pushed capital gains tax up to 18% for basic rate taxpayers and to 24% for higher earners.
Stamp duty rates are also higher for overseas buyers and those purchasing additional property.
Landlords and second home buyers now have to pay an extra 5% stamp duty, instead of 3%, while pensions will also form part of an estate for inheritance tax purposes from April 2027.
Labour added VAT to private school fees from the start of this year – analysis suggests parents will need to find an extra £111,300 per child for a full course of private education.
Where are the rich relocating to?
While the UK’s tax take is at a record level, there are plenty of locations looking to attract wealthy individuals with so-called golden visas in return for investment in government projects as well as businesses or residential developments.
One of the most popular locations is the United Arab Emirates (UAE), including Dubai, according to Henley & Partners.
Residents benefit from zero income tax as well as a luxury lifestyle. The UAE is poised to welcome a record net inflow of 6,700 millionaires this year alone, including Brits.
The number of millionaires who call Dubai home has increased by 102% in the last decade, bringing the total number to 81,200. This includes 237 centimillionaires, and 20 billionaires.
The UAE lets people apply for its golden residence visa by either buying a property worth a minimum of AED 2 million (approximately $550,000) in cash or through a loan from specific local banks.
There is also an option to purchase property off-plan through approved real estate companies.
“The evolution and development of the UAE’s wealth management ecosystem is unprecedented,” says Sinita Singh-Dalal, partner leading the private wealth and family offices at Hourani.
“In less than five years, the UAE has introduced a robust regulatory framework that provides the wealthy with a range of innovative solutions to protect, preserve and enhance their wealth.”
Other top destinations for migrating millionaires include the USA, with Florida attracting expats, as well as Singapore, Canada and Australia.
The US has an immigrant investor programme where it provides residency to those who put $1,050,000 into a non-targeted employment area project or $800,000 into a targeted employment area project in a rural area or an area with high unemployment.
Alternatively, there is also a scheme for those who create or preserve 10 permanent full-time jobs for qualified USA workers.
Singapore has an investment for residency programme to back either a Singapore Economic Development Board fund, new companies or to establish a family office in the country.
You can get Canadian residency by setting up a business or raising money through an angel investment or a venture capital fund.
Meanwhile, rather than seeking investment, Australia welcomes prominent and internationally-recognised talent from certain sectors such as energy, defence, financial services and education.
“The countries with the greatest growth in high-net-worth individuals continue to be those who have prioritised policies designed to entice millionaires to their shores,” adds Volek.
“Nine of the Top 10 countries attracting the most millionaires in 2024 have formal investment migration programs and actively encourage foreign direct investment in return for residence or citizenship rights.”
One area that may become less attractive though is Spain.
Other European countries such as Cyprus, Italy, Malta and Portugal remain popular among expats and have ongoing golden visa schemes for those who invest certain sums.
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Projected net inflows of millionaires. Source: Henley & Partners
Country
Projected net inflows of millionaires
UAE
+6,700
USA
+3,800
Singapore
+3,500
Canada
+3,200
Australia
+2.500
Italy
+2,200
Switzerland
+1,500
Greece
+1,200
Portugal
+800
Japan
+400
Should the wealthy stay in the UK?
The end of nom-dom status and higher taxes may make the UK less attractive for wealthy people.
But there are arguments for sticking with the UK.
The government should be more predictable and stable compared with the US, plus London’s prime property market is well established and remains attractive as a safe haven amid volatile stock markets.
Tom Bill, head of UK residential research at Knight Frank, suggests more could even be done to attract overseas investors, especially as the Treasury wants more investment in British assets.
He said: “As the financial pressure intensifies on the government, which keeps borrowing costs higher for everyone, could it introduce a new measure with a politically-palatable name like a ‘UK investor visa’?
“Donald Trump recently unveiled plans for a ‘gold card’ visa in the US, which will cost $5 million. Elsewhere, the global landscape is a mix of countries winding schemes down as others ramp them up.”
He suggests this could help alleviate falling tax revenues as wealthy buyers exit the UK.
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Marc Shoffman is an award-winning freelance journalist specialising in business, personal finance and property. His work has appeared in print and online publications ranging from FT Business to The Times, Mail on Sunday and the i newspaper. He also co-presents the In For A Penny financial planning podcast.
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