The ultrarich move in herds. Just ask London.

Japan Times

14-07-2025

Milan is the place to be these days if you're rich and can stand the pizza. Goldman Sachs Group's Richard Gnodde, who leads the firm's businesses outside North America, is among financial executives relocating from London after the U.K. changed its tax rules for foreign residents. Ann Kaplan Mulholland, a Canadian reality-TV star who owns a castle in Kent with her husband, is also making the move, though she bemoans the lack of culinary options in Italy for noncarbohydrate-eating immigrants.
If the campaign against abolition of the "nondom' (nondomiciled) regime is measured by the volume of noise on each side, then the verdict is already in: Britain has made a giant mistake and will rue driving away ultrawealthy individuals who pay (on average) large amounts of tax, enrich the economy with their entrepreneurial talents and fund philanthropic works. A drumbeat of reports of notable departures has grown louder after the nondom privileges ended in early April, along with predictions of the resulting fiscal damage.
The latest contribution comes from the London-based Centre for Economics and Business Research, which recently published a study commissioned by a campaign group calling itself Land of Opportunity. The report says the tax changes could cost the Treasury £7.1 billion ($9.5 billion) if 40% of nondoms — about 80,000 taxpayers — leave. Research by Oxford Economics for another recently formed lobby group named Foreign Investors for Britain estimated a cost of almost £1 billion if 32% depart. A Treasury spokesperson said it didn't recognize the figures in the CEBR report, noting that the independent Office for Budget Responsibility had "confirmed' the changes would raise £33.8 billion over the next five years. Someone is going to have egg on their face.
The truth is that no one can know for sure and vindication will only come in the shape of official tax revenue data. By that time, the nondom ships will long have sailed — to northern Italy, Dubai, Switzerland, Monaco and other tax-friendlier jurisdictions. An exodus of more than 30% is well within the bounds of possibility if what tax advisers are seeing is any guide. "I absolutely wouldn't be surprised if it's 25% plus, heading into the 40% mark,' Charlie Sosna, global head of private wealth and tax at law firm Mishcon de Reya, said on Bloomberg Radio recently. The OBR used assumptions of between 12% and 25% and cautioned that its estimates were "highly uncertain.'
Tax consultants have skin in the game and therefore aren't unbiased observers, but they also deal directly with clients, so they are better placed than most to have a reading on trends. And some of their criticisms of the policy changes are well-aimed. The nondom regime, which exempted temporary foreign residents from paying tax on their overseas income and gains, was an archaic system (with origins in the Napoleonic Wars) that was too complicated and didn't incentivize people to bring their money into the U.K. But the Labour government's replacement was a missed opportunity to design a system that would have been both more attractive to high-net-worth individuals and raised more revenue, Sosna told me.
The revised rules give a four-year tax break on foreign income and gains. "You could be a multibillionaire that comes to the U.K., sells your company, pays no tax at all and then you move on,' he said. "And the reality is the regime that they've created is attracting those people.' At the same time, four years is too short to attract longer-term entrants that might be valuable for Britain's economy and society. Making temporary foreign residents subject to the U.K.'s 40% inheritance tax was also a "massive' problem. Many nondoms were members of global families. "You're part of a much bigger puzzle so it's not just your decision, it's your whole family's wealth,' Sosna said.
At this point, discussion is probably academic: The die is cast. As the CEBR report observes, the super-rich tend to cluster. They move in herds and the drift of nondoms away from Britain is likely to have a signaling effect that will cause the trend to gather momentum. It isn't just about tax. London has already lost some cachet, with the listings market in a prolonged slump and an increase in petty crime taking the edge off the city's appeal. It's less fun being ultrawealthy in a city where you can't wear your expensive watch or jewelry on the street without undue risk.
The beneficiaries are countries such as Italy, which is attracting wealthy foreign residents with an annual flat fee of €200,000 ($225,000) — something that the free-market Adam Smith Institute, among others, has called for the U.K. to emulate. Milan has much to offer: It's the financial, fashion and design capital of Italy, packed with art and historic architecture, and with Lake Como and the Alps just a short drive away. Shame about the pizza.
Matthew Brooker is a Bloomberg Opinion columnist covering business and infrastructure.