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Fears of a massive non-dom exodus from the UK have been allayed by initial tax data, which suggests that total numbers leaving the country are in line with — or even below — official forecasts.
HM Revenue & Customs payroll data has found no evidence to suggest more non-doms left Britain in response to Rachel Reeves’ 2024 Budget than official predictions, according to people briefed on the findings.
The findings will be a relief to the chancellor after a series of surveys — based mainly on anecdotal evidence — suggested her tax policies had prompted huge numbers of wealthy individuals to flee the country.
Reeves was told by the Office for Budget Responsibility to expect 25 per cent of non-doms with trusts to quit the country in response to the crackdown on their tax status, which began under the Conservatives and intensified when Reeves became chancellor last year.
HMRC data now suggests this prediction is broadly correct, the people said — removing pressure on Reeves to reverse a Labour policy that is forecast to raise more than £4bn in 2026-27 and almost £6bn the following year.
“With all the things going on in the world, Britain looks like a pretty safe and stable place,” said a government official. “We’ve got a lot to market ourselves on.”
However, advisers to the wealthiest non-domiciled individuals have nevertheless reported significant departures. Robert Brodrick, a partner at law firm Payne Hicks Beach, said “the majority” of his non-dom clients who were paying or had previously paid the £90,000 annual fee to use the tax-favourable “remittance basis” had left the country.
Provisional HMRC figures show there were 60,700 non-doms — people resident in Britain but with their permanent home outside the country — in the 2023-24 tax year. This was down 30 per cent on 2014-15.
Up until April, when the status was scrapped, these non-doms paid UK taxes on any UK income and capital gains, but this was not levied on foreign income or gains, unless brought into the country.
The OBR estimated in January that about one in 10 non-doms without trusts would leave the UK because of the decision to abolish the status, and end the ability of non-doms to shield foreign assets held in an offshore trust from inheritance tax. Among those with trusts, the estimate was that one in four would leave.
Some of those briefed on the early HMRC data said the figures suggested that fewer people were leaving than projected by the OBR, while others said the departures were in line with forecasts.
One Reeves ally said: “We’ve seen no evidence that there’s been a change in the non-dom profile beyond what the OBR forecast.” This will be a relief to the chancellor, who is under pressure to fill a fiscal hole that some economists say is at least £20bn.
HMRC was drawing on payroll data, which businesses send to the tax office every month, to determine the trend of non-dom departures.
Most non-doms receive UK employment or pension income, meaning they are captured in official Pay as You Earn data. Tax officials can therefore track whether they have left the UK because they would have fallen off the latest PAYE figures.
Tax experts also said the Treasury would have more confidence in using payroll data now because more than 120 days had passed since the start of the tax year. In most cases, anyone who did not want to be considered UK tax resident would have left before spending 120 days of the current tax year, which began on April 6.
However non-doms who do not work in the UK may not be featured in the PAYE data, and HMRC will not have a full understanding of exactly how many have fled the reforms until January 2027 when individuals submit tax returns for the 2025-26 year.
Reeves has considered retreating on one element of her non-dom tax reforms relating to inheritance tax, according to government officials, but will wait for full data to arrive before deciding whether to do so.
The decision to expose worldwide assets to IHT at 40 per cent has been highly contentious, and had sparked warnings of an exodus of wealthy people from the UK.
A widely cited report published in association with Henley & Partners, a consultancy that markets passports and residency permit schemes, was criticised for claiming that 16,500 millionaires would quit the country. Critics said it relied heavily on data from LinkedIn, which is not reliable for finding someone’s tax residence.
Financial Times analysis of Companies House filings this month showed a rise in the number of company directors, which would include both former non-doms and UK-domiciled people, who had left the UK since the Budget.
Some 3,790 directors reported leaving the UK between November 2024 and July this year, from 2,712 in the same period a year earlier. Dubai, which has no individual income or capital gains tax, has been a main beneficiary.
The Treasury said it was right for people who made their home in Britain to pay taxes here, but added: “The UK remains a highly attractive place to live and invest. Our main capital gains tax rate is lower than any other G7 European country and our new residence-based regime is simpler and more attractive than the previous one.”
