Those with the means to do so are quitting the UK at breakneck speed – and anticipated changes to UK tax law could accelerate the exodus, new research suggests. This year, the UK has lost more millionaires than any other country, except for the People’s Republic of China. According to data from Visual Capitalist, the UK will suffer a net loss of 9,500 millionaires in 2024. In the same period, Italy is set to score a net increase of 2,200 millionaires, while the UAE is expected to attract a whopping 6,700.

With the UK’s new Labour government posed to scrap so-called non-dom status, thousands more millionaires are considering leaving the country, as per a September study by Oxford Economics. Although the reforms are designed to raise money for The Treasury, the study finds that by 2029/30, it will result in a net loss to the Exchequer of £900 million, as a result of emigration.

Investors warned over fresh tax hikes

The threat of further exodus by investors and entrepreneurs comes after the CEO of the deVere Group, Nigel Green, issued a warning over prospective tax increases which would make the UK “less welcoming to overseas investment.” Looking ahead to the government’s October budget, Mr Green said significant increases to capital gains tax, national insurance and inheritance tax would not only hit the super-rich, but also “Middle-income families who have prudently invested in property, pensions, or businesses [who] will bear the brunt,”

Tax rates in the UK have been creeping up across the board for the best part of a decade – and are now at their highest levels since 1948. Governments of every stripe have levied new and ever higher taxes, with almost no income bracket spared from the increases. Perhaps it shouldn’t be surprising that the prospect of a new government again reaching for the tax lever is tempting those who can take their money elsewhere.

It comes amid a tough economic situation in the UK, which is experiencing anaemic growth, floundering productivity and stagnant wages. The Office for National Statistics’s August Insights revealed a quarter of traders saw their turnover fall in July, while two-thirds of businesses reported concern – with a plurality citing a reduced demand for goods and services.

What is non-dom status?

“Non-domiciled” status is a tax designation that allows individuals who are considered “non-domiciled” in the UK to limit the tax they pay on overseas income. A person’s domicile typically refers to their permanent home, and non-dom status is granted to individuals who reside in the UK but claim their domicile is in another country, usually by birth or intent to return there permanently.

Non-doms must still pay UK tax on any income and gains made within the UK, but they have the option to not be taxed on foreign income and gains unless they remit(bring that money into the UK. Sometimes termed a loophole by critics, the provision can provide significant tax advantages for wealthy individuals with substantial foreign investments or businesses. To use the remittance basis, non-doms typically need to pay a fee after residing in the UK for a certain number of years, starting at £30,000 per year after seven years.

However from April 6 next year, the special status is set to be abolished. The measure was first announced by the Conservative government – and insofar as such a thing is possible was set to land softly. However, the new Labour government has stiffened up the proposals. As per BDO:

“For those who currently hold non-dom status who will move from the remittance basis to the arising basis on 6 April 2025, as they do not qualify for the four-year FIG regime, some transitional relief will be available (although, less generous than was announced by the previous Conservative government). The new Labour government will not, for example, be introducing the 50% reduction on foreign taxable income for individuals losing access to the remittance basis on 6 April 2025

“A Temporary Repatriation Facility (TRF) for FIG that arose to former remittance basis users before 6 April 2025 will be introduced, albeit the rate of tax and the length of time are not confirmed. The Government say that they wish to make the TRF as attractive as possible and details on whether it may also extend to stockpiled income and gains in offshore structures will also be confirmed at the Budget.”

Where are Britain’s millionaires going?

Many British millionaires are relocating abroad to countries with more generous tax regimes. By 2028, as many as 500,000 may have upped sticks, according to a report by UBS, which if born out would mean a fifth of the millionaires in the country will leave. As with other data sets, UBS also forecasts growth to the millionaire population of Italy – where Milan in particular is becoming a hotspot for British expats.

Italy’s finance capital has sought to attract wealth with a modest annual flat tax charged on any income earned abroad – and succeeded. Speaking to The Telegraph, Nimesh Shah of Blick Rothenberg said:

“The Labour tax proposals have accelerated people’s plans to move and they want to move quicker…I’ve never been so popular with Italian advisors, they are knocking down my door.”

Despite the fact in August, Italian Prime Minister Georgia Meloni doubled the flat tax – from £100,000 to £200,000 a year, Italy remains a magnet for millionaires in Britain and beyond. Speaking to The Financial Times, tax expert Marco Cerrato said:

“The increase from €100,000 to €200,000 does not make a huge difference for multimillionaires that have large foreign incomes…Individuals that we have been advising and that have planned to transfer to Italy after 2025 have not changed their plans.”

Other popular destinations include Spain, Germany and the UAE, with the rate of exodus increasing in the face of expected hikes to capital gains tax and the abolition of non-dom status.

Is it tax-efficient to move abroad?

The UK tax burden is currently at its highest since the post-war years and looks set to increase further. As a result, many with the means to do so are looking for alternatives for their families, investments and businesses. If you are considering moving abroad to remain tax efficient, it could pay to take professional financial advice to avoid any common pitfalls and ensure you make the decision which aligns with your personal and financial goals.