@Myotherpetisamouse I read an article about this yesterday (I've done a C&P below rather than posting a link), apparently an exodus of millionaires as Britain loses it's shine and other countries become more attractive to the super wealthy. Caveat, I'm not from/in the UK.
Britain was once a world leader in attracting the super-rich to its shores. Millionaire entrepreneurs and wealthy families flocked to the UK, buoyed by generous tax breaks, a simple visa system and strong economic prospects.
But a series of punishing tax changes, political uncertainty and more difficult migration rules have caused the ultra-wealthy to shun Britain – and take their money elsewhere.
Experts warned this had reduced the nation’s tax intake and resulted in higher taxes on ordinary households to fill the gap.
More millionaires are emigrating from the UK than arriving, according to analysis by migration consultancy Henley & Partners. The country has suffered a net outflow of 12,000 wealthy individuals – those with assets and cash of more than £830,000 (NZD$1.58M) – since 2017, with some 1,500 rich individuals leaving in 2022.
Experts said stealth tax raids and the increasing scrutiny of foreign nationals was to blame for Britain “losing its shine” among the super-wealthy.
The number of people claiming “non-dom” tax status, which exempts British residents with their permanent home abroad from paying UK tax on their foreign income or capital gains, has also fallen sharply.
New claims for the tax break fell from 14,200 to 8,500 in the 2020-21 tax year, according to a Freedom of Information request submitted to HM Revenue & Customs by law firm Pinsent Masons. It marked a further decline from the 15,400 new claims made in 2018-19.
Recent reforms have watered down the tax benefits of non-dom status and made it less appealing, especially when compared to more generous schemes found in other countries.
Experts said the repeated introduction of new tougher rules had scared many people away.
Since 2008, claimants in the UK have had to pay a £30,000 (NZD$57,386) annual charge if they have been a resident for seven of the previous nine tax years. This rises to £60,000 (NZD$114,772) after being resident for 12 of the past 14 tax years.
Another rule change followed in 2017, meaning someone who has lived in the UK for at least 15 of the past 20 years automatically becomes domiciled in the UK and is taxed on their worldwide wealth like the rest of the population.
Steven Porter, of law firm Pinsent Masons, said: “Quite a number of non-doms have left the UK because of the 15-year rule, and we expect this to continue for a number of years.
“It’s just not as favourable for individuals to stay here any more. The UK has lost its lustre.”
Nimesh Shah, of tax specialist Blick Rothenberg, said: “The UK’s non-dom regime used to be the envy of the world. But in recent years the general shine has come off and it has fallen behind other countries, who have been competing hard to attract wealthy talent.”
Wealthy entrepreneurs and investors have also been spooked by Labour promises to abolish non-dom status entirely should it win the next election, experts said.
Other countries are competing to snap up wealthy and talented individuals who feel neglected by Britain.
Andrew Amoils of New World Wealth, an analyst, said: “The UK used to be very smart about encouraging people to move there. That has certainly changed, and we have definitely seen a drop in the number of very wealthy individuals moving to the country since 2017.
“The English language has always kept the UK on the map when it comes to attracting foreign wealth, but there are other English-speaking countries, like Australia, now competing hard for that talent.”
The British inheritance tax system was an ongoing deterrent for foreign nationals, added Amoils.
“The UK has quite a low inheritance tax threshold and high rate of tax when compared with other countries, with the exception of maybe France and Japan.
“There are First World countries that don’t have an inheritance tax, like Australia, or have high thresholds – like the US, where only estates over $12 million are liable.”
Amoils said other countries were now leading the global race to attract wealthy foreign nationals with generous tax schemes. Last year, Greece gained 1,200 millionaires, Portugal attracted 1,300 and Switzerland gained 2,200.
The exodus of rich individuals from the UK and its failure to compete for wealthy talent on the world stage threatens to have dire consequences for the British economy.
Experts have warned business leaders and investors relocating elsewhere because of Britain’s restrictive tax regime would have a “significant long-term impact” on the economy.
Porter said: “When people are this wealthy, they can afford to be picky about where they chose to live and invest their money. They can shop around, and tax benefits are on the top of their list.”
The number of non-doms in the UK has almost halved since 2015, dropping from 123,000 to 68,300 in 2021, according to HMRC data.
The UK government has insisted that despite a fall in new non-doms registering in the UK in 2020-21, which it partly attributed to reduced travel amid the pandemic, its tax income from these individuals remained largely in line with previous years.