Half of non-doms say they have already left or are considering leaving the UK permanently

Tax changes and Brexit forcing non-doms to look abroad UK Government jeopardising £9.3bn in revenue.

46% of non-doms say they are considering leaving the UK for good in the near future, as tax changes and Brexit force them to look overseas, shows our latest non-dom research.

The number of those thinking of leaving the UK permanently rose from 37% at this time last year, while 10% have already left.

Of those considering leaving the UK, the two most commonly stated reasons were tax increases for non-doms and Brexit.

The UK has become significantly less attractive to non-doms in recent years, who pay up to a £90,000 annual charge should they wish to be taxed on a remittance basis.

Further Government reforms to tax rules for non-doms had been due to come into effect in April 2017, but were delayed ahead of the snap election. The new laws will see non-doms who have been resident in the UK for 15 of the past 20 years become ‘deemed domiciled.’ This means they will be treated as if they were UK citizens for all tax purposes, resulting in them paying more tax than they do currently, with the exception of certain trust arrangements.

The Government has just published an updated Finance Bill confirming its intention to introduce these reforms with effect from 6 April 2017.

UK non-doms contributed £9.3bn in tax and national insurance receipts last year*, as well as employing thousands of UK citizens through their businesses. This illustrates the significant revenue loss and talent drain that the UK could face should non-doms continue to leave the country.

Many of the non-doms surveyed questioned whether the Government truly appreciated the revenue it might lose. One respondent said that they pay over £1 million in tax to HMRC each year which would be lost if they leave the country.

Non-doms may be wary of remaining in the UK post-Brexit as the country faces a potentially weakened trading position. Many non-doms come to the UK as a gateway to Europe, but ease-of-access to the EU could be reduced following Brexit negotiations.

Research carried out by Moore Stephens LLP found that:
  • 53% of non-doms said that more competitive tax rates would persuade them to remain in the UK
  • of those who have already relocated from the UK, the most popular destinations were the USA (29%) and Monaco (14%)
  • similarly, those who are planning on leaving said that Switzerland (14%), USA (10%), and Monaco (7%) were the most attractive destinations.
Simon Baylis, Head of Private Client Tax, says: “It’s clear that non-doms have serious concerns about their futures in the UK."

"Many non-doms have been squeezed by tax law changes over the last decade or so, but Brexit could be the tipping point."

"If half of the non-doms choose to leave the UK – as our research suggests could be likely – the Government could lose close to £5 billion in revenue."

" Non-doms also make a substantial contribution to the UK outside of taxation. One respondent, for example, said they employ over 1,000 people. Figures this high suggests a rethink of approach is required by the Government."

" The UK should be introducing policies to compete for the global pool of ultra-high net-worth individuals, not introducing policies to drive them away.”

*2014/15, latest available data from HMRC

First published by Moore Stephens LLP September 2017