LONDON (CNBC) — Monaco, Italy, Switzerland, Dubai. They’re just a few of the destinations trying to lure away the UK’s uber wealthy ahead of proposed changes to the country’s divisive non-dom tax regime.
Almost two-thirds (63%) of wealthy investors said they plan to leave the UK within two years or “shortly” if the Labour government moves ahead with plans to ax the colonial-era tax concession, while 67% said they would not have emigrated to Britain in the first place, according to a new study from Oxford Economics, which assesses the implications of the plans.
The UK’s non-dom regime is a 200-year-old tax rule, which permits people living in the UK but who are domiciled elsewhere to avoid paying tax on income and capital gains earnings overseas for up to 15 years. As of 2023, an estimated 74,000 people enjoyed the status, up from 68,900 the previous year.
Labour last month set out plans to abolish the status, expanding on a pledge set out in its election manifesto and stepping up earlier proposals by the previous Conservative government to phase out the regime over time.
It comes as Prime Minister Keir Starmer has pledged to improve fairness and shore up the public finances, with further announcements expected early next week at the Labour Party’s annual conference and during the Oct. 30 Autumn budget statement.
Finance Minister Rachel Reeves has said that scrapping the program could generate £2.6 billion ($3.45 billion) over the course of the next government. However, Oxford Economics’ research, which was produced earlier this month in collaboration with lobby group Foreign Investors for Britain, estimates the changes will instead cost taxpayers £1 billion by 2029/30.