The UK has witnessed an unprecedented exodus of millionaires since the Labour Party assumed power last year, The Times reported on Friday. This flight of wealth follows Prime Minister Keir Starmer’s controversial overhaul of the country’s tax regime, particularly targeting the abolition of the non-domicile (non-dom) tax status.
The non-dom system allowed wealthy individuals residing in the UK to pay taxes only on income earned domestically, while their foreign earnings remained untaxed. This arrangement, long criticized as favoring the ultra-wealthy, was seen as a magnet for high-net-worth individuals. As of 2023, around 74,000 non-doms were officially registered in the UK.
However, Labour’s plan to replace the non-dom system with a residence-based tax regime has had sweeping consequences. According to analytics firm New World Wealth, the UK experienced a net loss of 10,800 millionaires in 2024—a staggering 157% increase compared to 2023. This equates to one millionaire leaving the country every 45 minutes since Labour’s election victory last July.
Where Are They Going?
The report reveals that Italy, Switzerland, and the UAE have emerged as the most popular destinations for the UK’s departing millionaires. Among them were 78 centimillionaires and 12 billionaires, underscoring the scale of the wealth migration.
Significantly, the actual number of affluent individuals leaving may be even higher, as the net figure also accounts for wealthy newcomers to the UK.
Economic Implications
The exodus of the super-rich is a growing concern for the UK economy. Non-doms contribute significantly to public finances, with the average non-dom reportedly paying £800,000 ($970,000) in VAT alone last year. These individuals are also key players in investment and high-end markets, supporting luxury goods, real estate, and bespoke services.
The Office for Budget Responsibility (OBR) has projected that between 12% and 25% of non-doms could leave the UK as a result of Labour’s tax reforms. If a quarter of them depart, The Times warns, the economic blow could be severe.
While Labour claims the new tax policy will generate £2.5 billion annually for the Treasury, critics highlight potential drawbacks. Oxford Economics estimates that the reforms could cost the UK nearly £1 billion a year in lost revenue due to the departure of high-earning individuals and the investments they bring.
A Divisive Policy
Labour has defended its reforms as necessary to address the budgetary shortfall it inherited from the Conservative government, estimated at £22 billion. Chancellor of the Exchequer Rachel Reeves has argued that the additional revenue will fund critical social programs, including free school breakfasts, improved healthcare, and expanded dental care access.
However, opponents argue that the reforms risk driving away a vital segment of the economy. The policy has sparked a heated debate over balancing fiscal equity with economic competitiveness, as critics warn that losing the super-rich could undermine broader economic growth.
Conclusion
The Labour government’s tax reforms have undoubtedly triggered a seismic shift in the UK’s wealth landscape. While the party aims to redistribute resources and fund essential services, the flight of the super-rich raises pressing questions about the long-term impact on investment, job creation, and overall economic stability.
As Britain navigates this new fiscal era, it remains to be seen whether the short-term gains from the tax reforms can outweigh the potential long-term costs of losing its wealthiest residents.
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