Rachel Reeves faces £66bn blow after tax raid pushes rich to flee UK in record numbers

The 16,500 millionaires expected to leave in 2025 will be taking £66 billion in investable assets abroad, according to the Henley Private Wealth Migration Report.

The exodus follows the Government's overhaul of the non-domicile tax regime, Knight Frank analysis reveals. The non-dom rules have already created a £401 million stamp duty revenue shortfall between March 2024 and May this year.

This lost revenue represents four per cent of the Government's £9.9 billion fiscal headroom, according to Office for Budget Responsibility estimates.

The non-dom tax changes began accelerating in February 2022 when the Tier 1 investor visa was closed, eliminating a crucial entry route for wealthy foreign nationals.

The Conservative Government then overhauled the non-domicile tax regime in March 2024, followed by Labour's inheritance tax rule changes in October, which Dr Juerg Steffen, chief executive of Henley & Partners, said "triggered a sharp escalation, pushing net millionaire departures into double digits for the first time."

The April abolition of the centuries-old non-dom regime ended the system where wealthy foreigners could shelter worldwide assets from British taxes for an annual fee starting at £30,000.

The new residence-based system requires wealthy foreigners living in Britain for more than four years to pay UK income and capital gains taxes on global earnings.

Those staying long enough will see their worldwide assets become subject to UK inheritance tax at 40 per cent, one of the highest rates globally.

The scale of departures has reportedly prompted Chancellor Rachel Reeves to consider reversing the decision to subject wealthy foreigners to British inheritance tax.

Reform UK has announced alternative plans for a "Robin Hood" policy offering non-doms the opportunity to pay a £250,000 fee to shield global earnings from UK tax, with proceeds directed to the lowest paid.

Knight Frank's analysis shows the prime property market has also suffered, with £5 million-plus sales in London falling 14 per cent in the year to May compared to the previous 12-month period.

Steffen described Britain as "a cautionary tale in this new era of wealth migration", noting that the UK's wealth outflow had been "years in the making" but accelerated by pivotal policy shifts.

He explained: "Prior to 2016, the UK had always attracted more millionaires than it lost to migration."

High-profile departures include Anne Beaufour, the billionaire French heiress, Max Gottschalk, the German investor, Tim Hanford, co-president of JC Flowers, and Eddie Hearn, the boxing promoter.

Lakshmi Mittal, the steel tycoon and one of Britain's richest men, is reportedly considering relocation.

Henley & Partners reported a 183 per cent increase in British nationals applying for overseas residence and citizenship programmes in the first quarter of this year compared to the same period last year.

The UAE emerges as the primary destination for departing millionaires, with Dubai and Abu Dhabi set to gain a net 9,800 high net worth individuals this year.

Steffen attributed the UAE's appeal to "zero income tax, world-class infrastructure, political stability and a regulatory framework that treats capital as partner rather than prey."

Other top destinations include the United States, Italy and Switzerland, whilst EU heavyweights France, Spain and Germany face their own net losses of 800, 500 and 400 millionaires respectively.

Tax campaigners offer perspective on the exodus, with Alex Cobham of the Tax Justice Network noting: "If you took Henley's numbers seriously, the claim is that just 0.6 per cent of the UK millionaire population will move.

They're telling us that because the cup might be 0.6 per cent empty that is, 99.4 per cent full somehow we should be giving tax breaks to the extremely wealthy."