A story of wealthy foreigners in UK: Britain wants their billions, not their baggage

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2 days ago

As Britain tightens its tax regime on wealthy foreign residents, the billions they once brought to the UK economy are at risk of vanishing read more
For decades, the UK has courted global wealth, offering a famously flexible tax regime to high net-worth individuals. The so-called 'non-domiciled' (non-dom) status allowed foreign residents to live in Britain without paying UK taxes on their overseas income and assets. This policy, which dates back over 200 years, became a magnet for international billionaires, financiers and entrepreneurs seeking stability, legal clarity, elite education and cultural cachet.
By the 2022–23 tax year, this group paid £6.2 billion in taxes—despite most of their global wealth being shielded from HMRC, the short form of His Majesty's Revenue & Customs. According to a Financial Times report, a large proportion of this wealth came from a relatively small pool, which is the top 1 percent of earners contributing 29 percent of all income tax in Britain, underlining their fiscal importance.
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But in a political environment transformed by populist pressures, fiscal shortfalls and shifting values, the UK's welcome mat for the world's wealthiest has been sharply pulled back. And now, many of these residents are quietly, or not-so-quietly, packing their bags.
The other Brexit
In the picturesque town of Bruton in Somerset, the departure of art-world power couple Iwan and Manuela Wirth became symbolic of a larger trend. The Swiss founders of the global Hauser & Wirth gallery have been resident in the UK since 2016, enriching the cultural landscape of both London and the English countryside. Despite not being non-doms themselves, the couple recently returned to Switzerland for a mix of professional and personal reasons, the Financial Times said.
They are part of a growing cohort of ultra-wealthy foreigners who have concluded that Britain no longer offers the stability or incentives that once lured them. Among the other high-profile exits are Lakshmi Mittal, the steel magnate and Egypt's richest man Nassef Sawiris.
While full data on the number of departures may take years to materialise, there is widespread concern in financial circles that the government's attempt to raise £33.8 billion over five years by abolishing non-dom status might backfire potentially leading to a net loss in tax revenue if just a quarter of these wealthy individuals decide to leave, the Financial Times calculated.
A series of policy missteps?
Critics argue that Britain's recent changes to its foreign resident taxation regime have been both hasty and poorly designed. The first blow came under former Chancellor George Osborne in 2015 when permanent non-dom status was abolished. Initially, this didn't provoke much capital flight, creating a sense of false security among policymakers.
But that calm was shattered by subsequent reforms. In 2024, Chancellor Jeremy Hunt reduced the full tax benefit of foreign residency to just four years. A year later, Rachel Reeves, the incumbent Chancellor in the Labour government, introduced a 10-year inheritance tax window. which means, once that period ends, global assets become subject to up to 40 percent UK inheritance tax.
Labour now finds itself at a crossroads. Under pressure to fund public services while avoiding austerity, the party has been debating how far to go in taxing wealth. Former Labour leader Lord Kinnock has floated the idea of a 2 per cent annual wealth tax on assets over £10 million, estimating it could raise £10–11 billion annually, a report in The Telegraph said.
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Unions have rallied behind the idea. Groups like Unison, Usdaw, the FBU and Unite have all declared a wealth tax as a moral imperative and a political necessity. They argue that such a policy would correct decades of asset-driven inequality, where house prices and financial assets soared while real incomes stagnated.
Yet some within Labour's ranks warn this might be a bridge too far. One of Keir Starmer's senior advisers has reportedly questioned whether recent wealth levies are already undercutting economic growth.
Economists such as Dan Neidle, founder of Tax Policy Associates, have cautioned that introducing an unprecedented wealth tax could trigger even more departures by wealthy individuals. He labelled it 'fantasy politics,' suggesting it assumes high-net-worth individuals would simply stay put and pay up, a premise he found implausible, The Telegraph said.
A 2020 report by the Wealth Tax Commission predicted that up to 17 per cent of taxable assets would be relocated abroad under such a regime, and as many as 20,000 taxpayers would be affected.
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Competition gets smarter
Other countries, meanwhile, are seizing the opportunity. Italy, for instance, offers a 15-year tax exemption on overseas assets in return for a flat €200,000 annual payment. Its inheritance tax begins at just 4 per cent. This makes it far more attractive than the UK, where wealthy foreigners must now weigh the cost of death duties, alongside constant policy reversals and political uncertainty.
Cultural and economic fallout
The loss of wealthy residents isn't just about taxes. The cultural and business footprint of this community is significant. The Wirths' investment in Somerset's cultural scene, for instance, helped to revitalise the rural town of Bruton and attract international tourism and jobs.
In less visible ways, high earners fuel the financial services sector, tech innovation and elite education. Private equity firms have reportedly struggled to persuade senior executives to relocate to London as the tax disadvantages increasingly outweigh the traditional benefits of English schooling and legal certainty, the Financial Times said.
A better way forward?
Many believe that a revised, simplified offer for foreign residents could retain Britain's competitive edge. A 10-year fixed tax arrangement perhaps offering a £200,000 annual fee in exchange for domestic tax liabilities while exempting offshore assets from inheritance tax might entice foreigners to stay and integrate more deeply.
The UK's appeal to international wealth has always rested on a delicate balance. That equilibrium is now under threat. Since Brexit, Britain has been testing the limits of its allure and perhaps overplaying its hand, which some see a counterproductive for the UK economy.