Going, going, gone: UK non-dom exits quicken after tax perk ends

Frederic de Mevius accumulated all the typical trappings of Britain’s super-rich over the past decade: a multimillion-pound Kensington and Chelsea home, a Mayfair office neighboring a five-star hotel for his investment firm and an advisory role supporting some of the nation’s famed cultural institutions.

The ninth-generation member of one of the world’s biggest dynastic fortunes now has something else that Britain’s wealthy are increasingly seeking out: a new life outside the UK.

De Mevius, a 66-year-old member of brewing giant AB InBev SA’s three founding families, switched his residency to his native Belgium within the past six months after living in the UK for more than a decade, registry filings show. A representative for de Mevius didn’t respond to several requests for comment.

Wealthy individuals hailing from Europe, the Middle East and Africa – including Egypt’s richest person, Nassef Sawiris – have exited Britain since early 2024 amid a wave of tax reforms. The measure most often unsettling the country’s well-heeled residents is the scrapping of its preferential tax regime for non-domiciled residents.

Under that system, which dates back to 1799 and ended on Saturday, so-called non-doms could avoid UK taxes on their overseas earnings for as long as 15 years.

“It’s a stream turning into a wave,” David Lesperance, a Poland-based tax and immigration adviser to the ultra-rich, said on wealthy UK residents leaving. “They’re going, going and gone.”

The UK has about 75,000 non-doms — spanning top City of London bankers to owners of global businesses — who contribute more than £8 billion in taxes a year, according to the latest official data.

The regime’s detractors have called it an anachronistic tax loophole — first introduced to protect colonial investments — but which today lets the ultra-rich enjoy London’s educational, cultural and other institutions and at the same time allows them to fly in and out of the capital and conduct global business at will, all the while paying relatively little tax.

The UK Treasury has forecast its non-dom reforms will boost the nation’s finances, but Britain’s fiscal watchdog has cited the expected average annual inflow of £2.5 billion over the coming years as “very” uncertain.

Other reports have warned the changes would cost the UK almost £1 billion a year in lost revenue, and in the final days of the non-dom era, the Adam Smith Institute, an economic think-tank, published research suggesting a potential £111 billion cost to the UK over the next decade, including more than 40,000 jobs lost.

The heightened departures from the UK are coming into focus as rich residents grapple with a raft of changes hitting their finances — from higher taxes on private equity investments to levies on private school fees — as part of UK Chancellor Rachel Reeves’ efforts to plug what she terms a £40 billion ($51.8 billion) economic hole.

Elite enclave

The UK, long a bastion of legal and political stability, has traditionally punched above its weight when attracting the global elite, but the nation’s reputation has taken a hit following Brexit and the flux of prime ministers since 2016. It lost 10,800 millionaires last year, the most of any country except China and more than twice as many that left the nation during 2023, according to Henley & Partners, which advises rich clients on migration.

Other wealthy individuals recently exploring a UK exit include Ricardo Leiman, chief investment officer for London-based hedge fund KLI Asset Management. The Brazilian native, who turns 59 this month and previously ran commodities trading firm Noble Group, has mulled a move to Italy, while UK private equity pioneer Jeremy Coller established Swiss residency last year. The founder of London-based Coller Capital has a net worth of about $4 billion, according to the Bloomberg Billionaires Index.

As for De Mevius, the former Lehman Brothers investment banker moved to London in 2012 and later bought an £8.3 million house, property filings show. He took on a board position to support a group of museums, including London’s prestigious Science Museum, and in 2020 founded Planet First Partners, a sustainability-focused investment firm with offices in London and Luxembourg.

“It’s one thing if all they’re doing is paying big restaurant bills and employing their nannies here,” British billionaire John Caudwell, the founder of Phones 4u, said in an interview on wealthy UK individuals departing the country. “But we don’t want to lose the wealth creators.”

Under the non-dom regime, claimants could initially benefit from the preferential treatment on earnings from abroad for 15 years at no cost, though they eventually faced annual charges of £60,000 if they remained in Britain.

In March 2024, the then-Conservative government bowed to pressure to raise funds for UK voters by replacing the non-dom structure with a residency-based system with only a four-year tax break on overseas earnings.

Keir Starmer’s Labour Party pledged to go further ahead of its landslide election victory in July with a new regime that kept the reduced time limit but sought to curb UK inheritance tax exemptions on overseas wealth.

Panic mode

For many non-doms, that confirmed their worst fears: putting foreign assets — typically making up the bulk of their fortunes — into UK authorities’ crosshairs.

Following Labour’s victory, City of London law firms and other private wealth advisers were flooded with queries from non-doms in panic mode. Some even joined forces to help establish a lobbying group to push back against the measures.

All the while, they typically faced three scenarios: leave now, leave later or stay.

Ann Kaplan Mulholland, a Canadian native, was a non-dom asking herself those questions. She put down roots in the UK about three years ago with her husband, Stephen Mulholland, a plastic surgeon who co-founded Nasdaq-listed medical devices business InMode Ltd.

They settled in a medieval Kent castle they acquired for £5.5 million in 2023. The couple established restaurants on the site where guests can dine on traditional British fare and rent out their premises for weddings.

They’ve decided to relocate once they hit the new four-year limit to avoid a UK tax sting on their global assets.

“No one’s going to put their money in the UK if you’re going to be penalized on your worldwide income,” Kaplan Mulholland, 64, said in an interview. “We’re going to take a lot out with us when we go.”

Competitive countries

Britain introduced two major reforms for its non-dom regime over the past two decades, but this year’s version comes at a time when nations are increasingly competitive about attracting the global elite.

Bassim Haidar, a Nigerian-Lebanese entrepreneur and Conservative Party donor, left the UK following Labour’s victory to relocate to Greece, which introduced in 2019 a tax regime for wealthy foreigners styled on the UK’s non-dom regime. Italy established a similar program two years earlier and has since attracted Sawiris, the co-owner of the Premier League’s Aston Villa football club. The Mulholland family plans to relocate there, too.

The Middle East has also become a favored spot for Britain’s wealthy residents seeking to relocate as well as well-heeled UK nationals wanting to spend the colder months abroad.

British real estate investor Asif Aziz has said he’s moving to Abu Dhabi, whose central government hub in late 2024 co-hosted an invite-only “roadshow” event about life and business opportunities in the United Arab Emirates capital at a five-star London hotel. Sawiris, with his $8.2 billion fortune, is also planning to spend time in Abu Dhabi after leaving the UK.

Lesperance, the tax adviser to wealthy individuals, said he alone has more than three-dozen clients who have made preparations to leave the UK in the fallout from its recent raft of tax changes.

“They have all got fire escape plans,” he said. “Some of them have already triggered it.”

The aftershocks of the UK’s non-dom changes are already starting to ripple through the UK economy. Property sales in prime central London – a non-dom hotspot – have flatlined amid the uncertainty and boosted demand for high-value letting as more rich foreigners living in the UK keep their options open, according to real estate broker Knight Frank.

Some of those who decided to stay — at least for now — are reining in their bets on the UK. A survey of 115 non-doms from Oxford Economics, commissioned by non-dom lobby group Foreign Investors for Britain, found that individuals had already divested a total of £840 million from local assets ahead of the planned reforms kicking in, spanning real estate, finance and hospitality.

Led by veteran lobbyist Leslie Macleod-Miller, Foreign Investors for Britain is expecting to continue engaging with 10 Downing Street on attracting wealthy individuals to the UK, according to a person familiar with the matter. One area of focus: a possible UK golden visa, which the country scrapped in 2022, that could rival similar efforts from the US, said the person, who asked not to be identified as the details are private.

Reeves’ policy to soften the blow is a three-year facility allowing former non-doms to bring in overseas wealth at reduced tax rates. The UK extended the program’s scope as it went through Parliament after Reeves said at a World Economic Forum event in January that she and her Treasury colleagues had been “listening” to non-doms’ concerns.

Piers Master, a London-based partner focusing on ultra-rich individuals at law firm Charles Russell Speechlys, said the policy targeted at former non-doms likely won’t be enough — and misses a key element.

“The great unknown,” he said, “is how many people now won’t come.”