10,800 millionaires leave the UK: understanding the abolition of non-dom status
Curated by OB Private, Crafted for You
The UK’s taxation landscape is undergoing a radical transformation, and for international buyers, investors, and high-net-worth individuals, these changes could redefine property ownership and financial planning. The abolition of the long-standing non-domiciled (non-dom) tax status marks a significant shift, moving towards a residence-based taxation system.
The end of non-dom status and a shift to residence-based taxation
Traditionally, non-dom status allowed UK residents to avoid taxation on foreign income and gains unless those funds were brought into the country. This policy provided a significant advantage to international buyers looking to establish a base in the UK while maintaining financial interests abroad. However, with a residence-based tax framework come April 2025, all UK residents will now be subject to tax on their global income and gains as they arise.
A silver lining for new arrivals
Despite the sweeping changes, the UK government is introducing a Four-Year Foreign Income and Gains Relief for new residents. Individuals who have not been UK tax residents in the 10 years prior to their arrival will enjoy a complete exemption from UK taxation on foreign income and gains for their first four years.
Inheritance tax overhaul: a new reality for global assets
For those with significant international wealth, the new residence-based Inheritance Tax (IHT) system is particularly noteworthy. Once a resident has spent 10 of the past 20 tax years in the UK, their worldwide assets – including those held abroad – will fall under the UK IHT regime. Furthermore, even after leaving the UK, individuals could remain liable for IHT for an additional 3 to 10 years, depending on their residency duration.
Transitional measures: a limited window of opportunity
To ease the transition, a Temporary Repatriation Facility will be introduced. This scheme allows individuals who previously claimed the remittance basis to repatriate foreign income and gains at a reduced tax rate – 12% for the first two years, increasing to 15% in the final year.
Trusts and wealth structuring: a major policy shift
For those utilising settlor-interested trusts, the reforms will significantly impact tax liabilities. The protections that previously shielded foreign income and gains within such trusts will be removed unless the individual qualifies for the four-year relief. This means that income and gains generated within these structures will now be taxed as they arise.
Overseas Workday Relief: a welcome extension with a cap
For globally mobile professionals, Overseas Workday Relief (OWR) will now extend to four years, aligning with the new foreign income and gains relief. However, the relief will be capped at the lower of £300,000 or 30% of total employment income.
What does this mean for high-net-worth individuals and property investors?
These reforms mark a significant departure from the UK’s traditionally favourable tax environment for international investors. While the four-year grace period provides some relief for new arrivals, long-term residents must now navigate a more complex tax regime, impacting everything from inheritance planning to property investments.
The UK remains an attractive destination for luxury property buyers, with its world-class amenities, stable economy, and vibrant culture. However, ensuring that your financial structures align with the new tax landscape is more critical than ever.
A note from Charlie
“The changes to the UK’s tax system for non-domiciles have had a profound impact on where high-net-worth individuals choose to reside. In 2024 alone, 10,800 millionaires left the UK – a staggering 157% increase from 2023. This is the largest exodus of millionaires on record, making it clear that tax policy is a primary driver in residency decisions, particularly for those with global wealth.
By contrast, jurisdictions like the UAE – where tax incentives remain highly attractive – saw an influx of 6,700 millionaires in 2024. This stark shift underscores the unintended consequences of the UK’s tax reforms, which have prompted many ultra-wealthy individuals to relocate their primary residence to more favourable tax environments.
Labour appears to have recognised this, with Rachel Reeves announcing on 23 January that the party is reconsidering aspects of the policy to ensure the UK remains competitive for high-net-worth individuals. However, the damage may already be done. Many of those who have left hold multiple residencies, making relocation relatively straightforward. Once they’ve structured their affairs elsewhere, incentivising them to return will be far more challenging.
That said, the UK will always hold appeal for the wealthy due to its world-class education, high quality of life, and political stability. Notably, 2024 has seen a surge in American buyers, driven by uncertainty in the US political landscape and the favourable dollar-to-pound exchange rate. While tax changes have undoubtedly shifted the non-dom landscape, the UK remains a key global hub for wealth – albeit one facing increasing competition from low-tax jurisdictions.”
A note from George
“The abolition of non-dom status, alongside increased stamp duty on second homes, is likely to drive demand in the super-prime rental market. Tight supply – exacerbated by fewer accidental landlords and limited high-quality listings – continues to push rents upward, with projections forecasting an 18.3% rise in upper-end rents by 2026. While the policy change may initially cause hesitation, the super-prime rental market’s international appeal and structural advantages will sustain its momentum with many departing non-doms still seeking a London base.
London’s super-prime rental market continues to attract high-net-worth tenants, particularly from the U.S. and China. Despite global economic challenges, London remains a secure investment and residential choice. The city’s reputation for top-tier education is also driving long-term leases near leading academic institutions. With its heritage, culture, and thriving luxury lifestyle, London remains an aspirational destination for UHNWIs.
These factors contribute to rising occupancy in prime areas like Knightsbridge and Mayfair, as well as emerging hotspots such as Holland Park and Notting Hill. Despite tax and regulatory changes, luxury new home rentals still offer yields of up to 4.5%, reinforcing this sector as a resilient and lucrative investment.
Meanwhile, the increase in Stamp Duty Land Tax (SDLT) for second homes from 3% to 5% is expected to deter landlords from acquiring additional properties, tightening rental supply. With demand remaining strong, private sector rents are likely to rise further.”
While the changes may appear daunting, proactive planning can ensure you continue to enjoy the benefits of investing in the UK’s premier property market. If you have questions about how these reforms may affect your financial position or property investments, contact us today for tailored guidance to safeguard your wealth and maximise your investment potential.
