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The town of Breton, Somerset, has many wealthy homeowners, including former Prime Minister George Osborne. Until recently, it was also home to Iwan and Manuela Wirth, co-founders of Hauser & Wirth, a global contemporary art gallery.
Worth moved to Switzerland and has been officially resident in the UK since 2016. They were ultimately abolished by the government in April, not by the non-territories, for family and occupational reasons. However, all wealthy expats are currently facing a 10-year deadline, and then the world assets are liable for UK inheritance taxes of up to 40%.
They are among many of this group leaving the UK, but some have been marginalized by rapid changes in tax systems intended to seduce tax systems. “Looking at the 10 reasons I was given to come, they all changed, so I decided to go,” another report was reported. The departures include steel billionaire Lakshmi Mittal and Egypt’s wealthiest man, Nassev Solis.
The full impact is unknown in a year or two, as the tax returns reveal how many of the 74,000 non-domes left, revealing the reasons for exaggeration by tax advisors and financial lobby groups. However, not only has the Treasury failed to win an estimated £33.8 billion in taxes over five years, it also raises the risk of lowering revenues when more than a quarter of affected people take leave.
It is clear that the British Prime Minister has fallen into false sense of security, due to the fact that the initial abolition of Osborne’s permanent non-DOM status caused less flight. Jeremy Hunt restricted the full financial benefits of foreign settlements for four years in 2024, while Rachel Reeves added 10 years of inheritance tax liability. A big mistake.
The latter scares many foreign residents who will end up being taxed elsewhere on property. Italy has attracted many former British non-domes with offers to protect foreign assets for 15 years in exchange for a payment of 200,000 euros per year. There is also an inheritance tax rate starting from just 4% of real estate.
Two hundred years ago, non-Dom governments were arbitrary and vulnerable. However, the rapid transition to a government that failed Reeves’ claim to be “internationally competitive” has proven to be highly unsettling. Reform leader Nigel Farage really doesn’t help his promise to a 10-year offshore tax shelter with a one-off payment of £250,000. Who can rely on this?
Think about why the UK needs a special government for foreigners. The US is taxing globally on everyone despite Donald Trump’s offer to provide citizenship with a $5 million “trump card” route. However, US taxes are generally lower (it has a much higher real estate tax standard) and economic opportunities are greater. The UK has to compete with others.
There are simple tax incentives to host wealthy foreigners. The UK received £6.2 billion in taxes from non-territories in the 2022-23 tax year, despite largely evacuated from overseas income and assets. By definition, given that 29% of all income taxes are paid in the top 1%, they can choose where to settle while the UK relies on high-income earners.
The UK also has broader economic benefits from foreign talent. Worth’s presence in London and Somerset is essential to the UK’s contemporary arts industry. This works on an invisible level. If private equity funds are trying to recruit senior executives to London, the latter will be even more difficult as to whether it is worth coming now.
The UK has, of course, appealing, from languages to stable legal systems and excellent schools and universities. But elsewhere has made themselves more attractive and has pushed luck since Brexit. Reeves is considering changes amid intense financial pressure as the scale of flights emerges by non-regionals.
Labor should go further. The four-year period in which the UK allows expats to evacuate assets from overseas income and taxes is intuitively too short. It is not competitive with other countries and does not give the family time to settle and put them in school before they leave again. The key to the planning of an expat is to tempt people not only to come but to stay.
I’ll make it longer and make the offer simpler. Allows foreign residents to pay UK-based taxes over a decade with an annual fee of at least £200,000 (not a Farage card). Next, make sure you only trust offshore assets for inheritance tax purposes. This may not please Labour MPs, but it will benefit the country.
john.gapper@ft.com
