New financial policies create waves – especially if their implications are broad and long-lasting, like those triggered by the government’s recent termination of the non-dom tax scheme.
An enduring part of UK law for more than 200 years, the non-dom regime has survived various abolition attempts, including in 1974 and 1988, as well as reforms in 2008 and 2017. But in March 2024, much to the surprise of many fiscal experts, the Conservative government announced its official demise, presumably to pip Labour at the post.
Months later, the dust settling, we attended a Henley & Partners conference in London and spoke with peers about the end of non-dom and its potential consequences for high-net-worth individuals (HNWIs) in the country. Here’s what we learned.
People move for many reasons
Accuro Managing Director and Global Chairman Mustafa Hussain began the event by explaining the main factors behind the movement of wealthy individuals globally. Changing political landscapes, for instance – particularly in countries like the US – have played a major role in recent HNW migration.
Political stability aside, people move for many reasons. Some HNWIs hold more than one citizenship, so they’re naturally mobile. Others emigrate to access a better educational system, invest in growing markets or take advantage of favourable tax rates, like those found in the United Arab Emirates and Italy.
Henley & Partners’ Dominic Volek continued the discussion, highlighting that while countries like the US, Canada and Italy remained popular destinations for HNW emigration, his firm had also seen a significant uptick in citizenship by investment (CBI) programme requests from wealthy people in the US and the UK.
So, America is a revolving door, with some HNWIs seeking a way in and others looking for an exit. In contrast, the situation in the UK is more one-directional, with roughly 9,500 millionaires projected to leave the country in 2024.
“As the world grapples with a perfect storm of geopolitical tensions, economic uncertainty and social upheaval, millionaires are voting with their feet in record numbers,” says Volek.
Non-dom gone: now what?
Rachel Reeves’ recent Budget took centre stage at the conference – particularly its renewed commitment to ending the non-dom regime. Despite Labour’s long-standing intention to abolish the scheme, the Conservative government officially announced its termination in spring 2024, with plans for complete abolition by April 2025.
Previous tweaks to the non-dom regime were minor, with New Labour scaling back the scheme in 2008 while retaining most of its original structure. In 2015, Conservative Chancellor George Osborne tightened the regime in his autumn Budget, but subsequent administrations decided not to make any further changes. Chancellor Philip Hammond, for example, later reviewed the scheme and felt that the government had “gone about as far as [it] could without starting to have a negative effect”.
So, why did Chancellor Jeremy Hunt finally take the plunge in March after so many years of scepticism? An insightful panel discussion explored the answer with Peter Ferrigno (Director of Tax Services at Henley & Partners), James Quarmby (Partner at Stephenson Harwood), Charlie Fowler (Partner at Collyer Bristow) and Rosie Todd (Partner at Stevens & Bolton), all contributing.
Initially, research from Warwick University and the London School of Economics (LSE) predicted that 77 HNWIs would leave in response to the tax change. According to experts, this was the number taken into consideration by the government when considering the reform.
However, in October, a paper published by the Adam Smith Institute warned that between capital flight and lost revenue, non-dom abolition could cost the UK up to £6.5 billion by 2035, virtually eliminating any additional taxes gained. Then, at the beginning of November, the Office for Budget Responsibility (OBR) revised its non-dom exodus estimate to 25%.
What’s next: fiscal butterflies and new horizons
According to the panellists, some HNWIs left before Reeves’ Budget even hit the news. With capital gains tax (CGT) potentially rising to 40 per cent, the UK no longer felt welcoming. In the end, CGT rose to a less frightening 24 per cent – but the damage had already been done.
Many have made a new home in Dubai. With its zero per cent income and dividends tax rate, favourable corporate tax structure, growing economy and high quality of life, the city is an attractive destination for wealthy individuals and their families. Golden visas are relatively easy to get and renew every 10 years, while Dubai’s vibrant multicultural atmosphere makes it easy to settle in.
And what about those fiscal butterflies? Well, after a decade, HNWI expats qualify for the country’s four-year foreign income and gains (FIG) regime and three-year asset repatriation scheme. In other words, if they’re missing the UK, they can return intermittently without being subject to remittance tax on worldwide income.
The UK’s divorce laws also emerged as a topic of discussion during the event – particularly its reputation as the "divorce capital of the world." The country’s system, which typically allocates a 50-50 split of the estate and encompasses the global assets of the couple, has made it a destination for "divorce tourism." However, interestingly, the UK’s divorce rate is currently the lowest it’s been since 1971.
The takeaway: a global future for HNWIs
After major announcements, there's often a lot of buzz, but once the initial reaction fades, it’s helpful to reconnect with industry peers. By doing this, we can talk about how things are unfolding and take a practical look at what these changes mean in real-world terms.
“This was an engaging event, with a mixture of corporate service providers, prospective clients and immigration specialists in attendance,” says Interpolitan Money Associate Jude Bedford. “The end of the non-dom regime has certainly been an upheaval, but wealthy individuals and their families are clearly in good hands at Henley & Partners.”
From a residence standpoint, destinations like the UAE are more attractive than ever – particularly for HNWIs with active businesses. Meanwhile, Italy, with its €200,000 flat-rate tax option, beautiful scenery and laid-back lifestyle, has recently seen an influx of millionaires.
One thing is certain: as HNWIs become more globally mobile, they need flexible financial solutions that can keep up. An Interpolitan Money multi-currency account is one option, offering seamless transactions across borders and in multiple currencies.
“Whether you’re relocating to the UAE, Italy, Canada or anywhere else, having an account that can travel easily and function effectively across jurisdictions is crucial,” says Bedford. “With an Interpolitan Money account, you can stay flexible and enjoy financial freedom, no matter where life takes you.”
We’re glad to have attended the Henley & Partners Conference and can’t wait for the next event. To learn more about Henley & Partners, visit the firm’s website or get in touch with a private client advisor today.
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