Non-Dom Exodus Fears Eased as Early HMRC Data Shows Fewer Departures Than Expected
The much-feared non-dom exodus from the UK appears to be far smaller than predicted, early tax data suggests — offering a political lifeline to Chancellor Rachel Reeves.
Initial payroll records from HM Revenue & Customs (HMRC) show no signs of an unexpected rush for the exits following the abolition of non-domiciled status earlier this year. Officials briefed on the figures say departures are either in line with forecasts or slightly below them.
It’s a rare moment of breathing space for Reeves, whose first Budget in 2024 triggered headlines warning of a mass flight of wealthy residents.
Fears of a Wealth Flight Prove Overblown
The Office for Budget Responsibility (OBR) had warned Reeves to expect around 25% of non-doms with trusts to quit the country after the long-standing tax perks were removed. This crackdown — initiated under the Conservatives but intensified when Reeves took charge — aimed to raise over £4bn in 2026–27 and nearly £6bn the following year.
Now, early figures indicate those forecasts are broadly correct. That means there’s no immediate pressure on Labour to reverse course.
“With all the things going on in the world, Britain looks like a pretty safe and stable place,” said a government official. “We’ve got a lot to market ourselves on.”
Advisers Say Some Rich Clients Still Packing Bags
Not everyone’s convinced. Lawyers and advisers to the super-rich report notable departures. Robert Brodrick, partner at Payne Hicks Beach, said “the majority” of his non-dom clients paying — or having previously paid — the £90,000 annual fee for the remittance basis have left.
According to provisional HMRC data, there were 60,700 non-doms in the 2023–24 tax year — down by 30% from 2014–15. Until April, they only paid UK tax on domestic income and capital gains, shielding foreign earnings unless brought into the country.
The OBR’s estimates assumed that one in ten non-doms without trusts, and one in four with trusts, would relocate. Early evidence now suggests fewer have gone than feared.
One close ally of Reeves said: “We’ve seen no evidence that there’s been a change in the non-dom profile beyond what the OBR forecast.”
How HMRC Is Tracking the Movers?
The HMRC has relied on PAYE payroll data — which most non-doms appear in through UK employment or pensions — to track movements.
Anyone dropping off the PAYE system is likely to have left. After more than 120 days into the current tax year, Treasury officials are confident this is a reliable snapshot.
Still, the full picture won’t be clear until January 2027, when tax returns for 2025–26 are processed. Non-doms who don’t work in the UK aren’t captured in payroll data.
The Inheritance Tax Twist
Reeves has privately considered softening one element of her reforms — exposing worldwide assets to 40% inheritance tax — but will wait for the full data before making a decision. This particular policy has been controversial, sparking warnings of high-net-worth individuals leaving en masse.
Some high-profile reports, such as one linked to Henley & Partners, predicted a loss of 16,500 millionaires. But critics point out the analysis relied heavily on LinkedIn data, which is a poor indicator of tax residency.
Meanwhile, fresh Financial Times analysis points to a rise in company directors relocating since the Budget, with Dubai proving a magnet for those keen to avoid income and capital gains taxes.
Similar issues have been explored in discussions on the inheritance tax overhaul now under consideration as the Treasury looks for ways to balance the books.
Treasury Says the UK Is Still Worth It
A Treasury spokesperson defended the reforms, saying: “The UK remains a highly attractive place to live and invest. Our main capital gains tax rate is lower than any other G7 European country and our new residence-based regime is simpler and more attractive than the previous one.”
For now, the non-dom exodus hasn’t materialised at the scale many feared. But with final figures years away, the debate over Britain’s allure to global wealth is far from over.
