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A Sudden Shift in Wealth Policy

The United Kingdom, once seen as a premier global destination for the ultra-wealthy, is witnessing an unprecedented outflow of millionaires and billionaires. The trigger? A bold policy move by Chancellor of the Exchequer Rachel Reeves, who recently eliminated the inheritance tax exemption on offshore trusts. This measure, intended to reinforce Labour's stance on wealth redistribution, may be backfiring with wider economic implications.

Overnight, the UK transformed from a tax-friendly haven for global elites into one of the most financially burdensome countries to pass on wealth, particularly for non-domiciled residents—those who live in Britain but consider their permanent home elsewhere.

Among those heading for the exits: Richard Gnodde, vice chairman of Goldman Sachs; Nassef Sawiris, Egypt’s wealthiest man and co-owner of Aston Villa Football Club; and shipping tycoon John Fredriksen. Steel magnate Lakshmi Mittal is also reportedly weighing his options.

The End of an Era

For over two decades, London served as a magnet for international wealth. The city’s luxury real estate market, prestigious schools, and low-tax status for non-doms made it particularly attractive. This sentiment was best captured in 1998 when then-Labour minister Peter Mandelson declared: “We are intensely relaxed about people getting filthy rich as long as they pay their taxes.”

However, the tide began turning in 2022 when the Russian invasion of Ukraine prompted a mass exodus of Russian oligarchs, many of whom had purchased properties and businesses in what was once nicknamed “Londongrad.” While that exodus was geopolitically specific, Reeves’ new tax reforms are sparking a much broader migration trend among the global elite.

From Non-Dom to Nowhere

The tipping point came during the March 2024 Budget. Then-Chancellor Jeremy Hunt proposed the abolition of the centuries-old non-dom tax status effective April 2025. This allowed non-doms to avoid paying UK tax on overseas income unless it was brought into the country. Hunt estimated the change would raise £2.7 billion annually.

Crucially, he maintained a carve-out: overseas assets placed in offshore trusts would remain protected from inheritance tax. That protection is what Reeves has now removed—exposing global estates to the UK’s 40% inheritance tax rate and prompting immediate flight.

Numbers That Paint a Stark Picture

Data from Henley & Partners and New World Wealth indicates that Britain saw a net loss of 10,800 millionaires in 2024, a 157% increase from the previous year. That figure is second only to China. Their latest report now projects that 16,500 millionaires will exit the UK in 2025, the highest on record since tracking began a decade ago.

Oxford Economics offers an even more troubling projection. Based on surveys, it estimates that up to 32% of the UK’s 74,000 non-doms may leave within two years of the tax change. This could cost the Treasury more than it gains—non-doms paid £8.9 billion in taxes in 2022–23 alone.

Ripple Effects Across Industries

The consequences go beyond lost tax revenue. London's luxury real estate sector is already feeling the pressure. Market tracker LonRes reported a 36% decline in high-end property transactions in May compared to the same month last year.

Meanwhile, Companies House records show over 4,400 company directors have left the UK in the past year, with departures accelerating as the new tax policies take hold.

These individuals are not just taxpayers; they are also employers, investors, donors, and consumers. Sectors like hospitality, legal services, private education, and philanthropy could face significant contractions as a result of their departure.

The Global Wealth Migration

While the UK tightens its tax grip, other countries are rolling out the red carpet. Italy, for instance, offers a flat €200,000 annual tax to shield foreign wealth. Gnodde has already made the move.

The United Arab Emirates, home to Sawiris and Fredriksen, is now the top destination for migrating millionaires. Henley & Partners projects the UAE will see a net influx of 9,800 millionaires this year alone.

Political Gamble or Policy Misstep?

Despite mounting evidence, the UK’s Office for Budget Responsibility continues to estimate Reeves' policy will yield £2.7 billion in annual revenue by 2028–29, assuming a modest 12–25% departure rate among non-doms.

But with actual exits potentially doubling those assumptions, the net fiscal benefit is in serious doubt. Moreover, public support for taxing the wealthy remains strong, making it politically difficult for Reeves to reverse course—even as cracks begin to show.

What Can Be Done?

Experts suggest one quick fix: reinstate the offshore trust exemption to stop the bleeding. But politically, Labour risks appearing to cave to the wealthy—a narrative they are unlikely to welcome.

Still, time is of the essence. Wealthy families are already planning relocations in time for the next school year. If no changes are made by the Chancellor’s autumn Budget, more departures are all but certain.

The UK may have finally found a line that even its famously tax-tolerant rich refuse to cross. Whether this shift proves to be a bold long-term restructuring or a costly misstep will depend on how the government responds in the months ahead.