Britain is on track to experience the largest exodus of millionaires globally as wealthy individuals flee the country ahead of the Government’s planned crackdown on non-domiciled tax (non-dom) rules.
According to analysis by the Adam Smith Institute, the share of the UK population classed as millionaires is expected to drop by 20% over the next five years, falling from 4.55% to 3.62%. In contrast, other European countries such as Germany, France, and Italy are predicted to grow their millionaire populations during the same period.
The exodus is being driven by high taxes, impending changes to the non-dom regime, and what the think tank described as “a hostile culture for wealth creators.” Labour’s pledge to close what it views as loopholes in the non-dom system is a central factor in the departure of the ultra-wealthy. However, Chancellor Rachel Reeves is reportedly reconsidering the policy amid concerns that it could cost the UK vital tax revenues if wealthy individuals leave en masse.
Nadhim Zahawi, a former chancellor, has called on Reeves to abandon the anti-non-dom stance and ease wealth taxes in the upcoming Budget. “The rate at which millionaires are leaving the UK is a vote of no confidence in both our current tax and regulatory regime,” Zahawi said, warning that the departure of these individuals could reduce funds for public services and hinder investment in the economy.
According to the Adam Smith Institute, the richest 1% of earners already pay 29% of the country’s income tax, making their exit a significant blow to the Treasury. An HM Treasury spokesperson defended the Government’s tax policy, stating, “We are addressing unfairness in the tax system so we can raise the revenue to rebuild our public services.”
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