UK faces mass exodus of millionaires amid tax regime changes

The UK is witnessing a significant outflow of wealthy individuals as financial conditions worsen. An estimated 142,000 millionaires plan to emigrate this year, with 16,500 projected to leave the UK alone within the next 12 months. Economic factors, including poor performance over the last decade and sweeping tax reforms by the Conservative and Labour governments, are driving affluent individuals towards more tax-friendly jurisdictions such as the UAE, Monaco, and Malta. This trend is particularly alarming as it marks the UK's position as one of the top countries to experience a decline in high-net-worth residents, losing twice as many millionaires as China and ten times more than Russia. Dr. Juerg Steffen, CEO at Henley & Partners, emphasizes that this reflects not only tax regime changes but also a growing belief among the wealthy that they can find greater opportunities and stability elsewhere. The recent changes in tax policies, notably the scrapping of non-domicile (non-dom) status by Chancellor Rachel Reeves, require wealthy foreigners living in the UK for more than four years to pay local income taxes on overseas earnings. Individuals staying for over a decade will face inheritance tax on worldwide assets, which many high earners view as punitive. Following these developments, notable figures, including billionaire Lakshmi Mittal, have announced their intentions to relocate, further fueling the trend. National consequences of this millionaire exodus are expected to be significant. The pushback from wealthy individuals not only threatens the UK’s Tax Revenue, which may drop drastically in the years following these reforms, but also raises concerns regarding economic competitiveness. With countries like Dubai and Monaco attracting top talent and investment, the UK's long-term allure for affluent individuals is in jeopardy, resulting in economic implications for the one in five UK residents already struggling financially. An urgent reevaluation and potential modifications to the tax framework may be necessary to address these losses and regain the interest of high-net-worth investors.