An official policy paper released by HM Treasury earlier this month laid out the UK’s much-publicised measures to clamp down harder on international wealth. Current non-dom status will be no more from April 2025, and the implications are currently being pored over in HNW hubs from Mayfair to Madrid.

While the release contained some more details on Labour’s plans to create a tax regime that “is both fair and as competitive as possible”, this was nothing particularly new.

Jeremy Hunt announced in his Spring Budget that non-dom status will be entirely replaced with a “modern, fairer, simpler” system based on residency, suggesting the move would raise £2.7bn a year by 2028/29.

Labour had already revealed plans to scrap non-dom status in April 2022, and the party’s election manifesto included a pledge to “abolish non-dom status once and for all, replacing it with a modern scheme for people genuinely in the country for a short period”.

Non-domiciled status originally came into being back in 1799, in response to the growth of the British Empire around the world. It meant British subjects living in far-flung colonies did not have to pay taxes in the UK. Current rules mean those registered as non-domiciled with HMRC pay no UK tax on overseas income and capital gains, unless the money is brought into the Britain or deposited in a UK bank account.

It’s worth noting at this point that non-doms shelled out nearly £9bn in UK taxes last year, the highest sum recorded since 2017.

PrimeResi surveyed some of the top advisors currently working in PCL – whose clients include the world’s wealthiest, most powerful individuals – to understand what effect the changes are having on the ground. Are UNHWIs really turning their backs on the UK, or is talk of leaving just that – talk. And if it’s the former, which other wealth hubs are shining bright in the eyes of elite globe-trotters? Will the capital’s prime property market suffer if the grass proves greener for some in Switzerland, Italy or Dubai?

There’s some real worries out there. Buying agent Jamie Freeman of Haringtons is concerned the UK will lose its competitive edge without “swift and strategic action”, and Becky Fatemi of Sotheby’s International Realty warns that international HNWIs will take their wealth and spending power with them if they leave. “It’s a huge topic of conversation and has caused some soul searching amongst our clients,” says Property Vision’s Philip Harvey.

But London’s educational and cultural offering – and relative political stability – gives it a major advantage over other global centres, says Rosi Walden of DDRE Global – and many report that demand still outstrips supply for best-in-class assets in the capital.

Mark Parkinson of Middleton Advisors suggests clients will be waiting to see the finer detail in the Budget, and most agree there’s unlikely to be a sell-off of trophy homes any time soon.

Grant Bates of Hamptons Private Office also reports some hesitation, but said clients are looking at the bigger picture: “UHNWs aren’t just about making shrewd investments; they’re choosing where in the world they want to live”.

Thus far, there’s no sign of the much-proclaimed exodus, notes Harvey – but perhaps the key question, he adds, is not how many HNWIs are leaving the UK, rather how many are now put off from coming here?

Without swift and strategic action, the UK risks losing its competitive edge

Jamie Freeman, Haringtons UK

The stark reality unfolding before us is that not only wealthy non-doms but a broad spectrum of individuals are contemplating an exit from the UK, with destinations like Milan, Dubai, and other tax-friendly jurisdictions growing increasingly appealing. This trend is particularly concerning given that the top 1% of earners, some of which are non-doms, contribute significantly to the Treasury. Yet, the current government appears determined to ramp up the tax burden on this very group, with whispers of additional changes to tax in the forthcoming Autumn statement.

While London retains its status as one of the world’s most desirable cities, these tax changes, particularly regarding non-dom status, are prompting a critical question: why remain in the UK when other nations offer more enticing prospects? The allure of cities like Hong Kong, Singapore, and Dubai, with their favourable tax regimes and vibrant career opportunities, is becoming hard to ignore, especially for younger high earners and ambitious professionals.

Unless this government presents compelling incentives for them to stay, the exodus of the 1% will persist, potentially leading to a significant talent drain. This departure not only impacts the UK’s tax revenues but also its standing as a global financial hub. Without swift and strategic action, the UK risks losing its competitive edge, as more and more individuals and families opt for greener pastures abroad.

There may inevitably be a biting point beyond which people are deterred, but I am not sure we are there yet

Charles Miéville, Residential Property Partner at law firm Forsters

Many non-dom clients are showing an interest in Italy, Switzerland and Dubai. We are however also noticing clients who are not choosing to leave the UK for such destinations, and instead are choosing to invest time and money into the UK. The US in particular (given impending political events) is a location that is showing a big interest in the UK. With some now relocating, these clients seem to be of the view that as their worldwide assets are subject to tax generally, if the rules are tightened here it doesn’t necessarily overly affect their position.

There are many other factors that still mean the UK is a preferred destination. Not least because of the language, rule of law, schools and cosmopolitan lifestyle, I am finding clients are still happy to come here and will shoulder any additional tax burden. There may inevitably be a biting point beyond which people are deterred, but I am not sure we are there yet.

For many clients, they are not affected by the non-dom changes in any event, for example many of my clients from the Middle East summer in London but would never be resident non dom in any event and will continue to spend time in the UK.

Clients are also holding onto their trophy assets, as prime and super prime homes and locations – particularly London – continues to retain value and personal interest. As a result, I do not think that there will be a glut of properties coming to the market, driving prices down, and we are still seeing the most exclusive properties selling off market and often for above an indicative guide price.

On the whole London’s appeal continues to shine brighter than other global destinations for our international buyers

Shaun Drummond, Residential Director at Harrods Estates

Since the 2019 Corbyn vs Johnson election, we have been aware that a significant proportion of our international buyers and their advisors, have been anticipating legislative changes, and many have already accounted for potential adjustments to the non-dom status. Although, we have seen several clients make the move overseas and some others postpone their searches in London – at least until after the October budget, we do not foresee a significant impact off the back of changes to non-dom status in the Prime Central London market in the near future.

The Corbyn vs Johnson election served as a wake-up call for many ultra-high-net-worth (UHNW) individuals, highlighting how quickly circumstances could shift against their favour. Despite Labour’s loss, vendors, buyers, and family offices have since been diligently collaborating with international tax advisors to safeguard their assets against any future legislative shifts. These savvy international family offices are not merely focusing on the next 12 months but are strategising with a five to ten-year horizon in mind.

International buyers continue to view London as a premier global investment destination, and its allure remains strong despite the high entry costs. Yes, some might always look elsewhere, but on the whole London’s appeal continues to shine brighter than other global destinations for our international buyers.

We are also seeing some sellers closely tracking these developments, with some clients keen to finalise deals before any potential changes are announced in the upcoming budget, which has led to a bit of a surge in instructions to sell ( mostly off-market) while others prefer to hold off and see what’s in store.

We are already seeing people leaving for places such as Dubai and Italy

Becky Fatemi, Executive Partner, Sotheby’s International Realty

London in particular thrives as being a truly ‘global’ city and ‘the’ global capital of the world in terms of business opportunities, first class education, the time zone, incredible housing stock, culture, lifestyle, access to Europe and more. By abolishing the ‘non-domicile regime’, Labour is actively discouraging international high net worth individuals from settling and remaining in the UK – and crucially if they leave for the most this means they are taking their wealth and spending power with them.

We are already seeing people leaving for places such as Dubai and Italy and in time as more and more depart it puts an unforeseen pressure on an intricate ecosystem, potentially endangering vast numbers of businesses and livelihoods alike. The impact is not confined to property sales alone; it extends to other sectors of London’s economy, notably hospitality, but also services, tradesmen, private transport, cab drivers, nannies, housekeepers and so on. It is very important that our government does not alienate international audiences from the UK – their wealth is vital in supporting our economy.

Under the previous rules, non-dom families could settle in the UK and enjoy various benefits. The new four-year window, drastically shortens this time, disrupting children’s education continuity and making it challenging for families to fully integrate and take advantage of the long-term educational benefits the city offers.

For most, London’s appeal extends far beyond its tax implications

Grant Bates, Head of Private Office, London, Hamptons

The proposed changes to the non-dom tax system have certainly sparked discussions among our ultra-high-net-worth clients. However, for most, London’s appeal extends far beyond its tax implications.

For obvious reasons UHNWs have never viewed London as a tax haven. They choose London because it’s one of the best cities in the world. London offers a unique property landscape that’s hard to replicate elsewhere. UHNWs aren’t just about making shrewd investments; they’re choosing where in the world they want to live – the world is literally their oyster. Our world-class education system is a huge draw for many of our international clients – a consideration that they consider almost priceless.

When we’re talking about billionaires, the financial implications of these tax changes are often not a significant deterrent. Consider this: they’re willingness to pay around £10 million in stamp duty on a £75 million property which demonstrates that their decision to buy in London is driven by desire rather than purely financial considerations.

There is some hesitation, but it’s primarily due to clients wanting to fully understand the implications before making offers. They’re being more cautious and consulting with their family offices. However, they’re still actively viewing and securing properties. The city’s unique offerings continue to outweigh potential financial implications for many of our clients.

We have seen a resurgence in the Prime Central London market over the past fortnight

Matt Goldsworthy, Head of International Residential at Hamptons

We’ve seen a notable uptick in HNWI’s expressing interest in select international markets. Specifically, Jersey, Monaco, and Dubai have garnered increased attention from this affluent demographic.

Interestingly, we have also seen a resurgence in the Prime Central London market over the past fortnight – all enquiries from overseas HNWIs, demonstrating renewed interest. Plus recent transactions all at £5m and above with international buyers – underscoring the continued appeal to a global clientele, despite recent announcements re: non doms.

Demand still outstrips supply for best-in-class assets in the capital

Rosi Walden, advisor at DDRE Global

I have spoken with several HNWIs who are planning to relocate out of the UK, or are now giving it serious consideration, amid concerns around changes to the Non-Dom status and the wider UK tax system since Labour took power.

As ever, uncertainty is the biggest factor. Many clients are entrepreneurs who could be facing especially high taxes when they choose to exit their businesses if they are based in the UK. They are often young and mobile, and so have a degree of flexibility over where they choose as a permanent base. And tax incentives are certainly a factor in their considerations. Having said that, I also have several HNW clients who haven’t been deterred by the proposed changes. It really comes down to the individual and their priorities. The UK still offers some of the world’s best education, relative economic and political stability, excellent culture and London in particular is a very green city by international comparison. These are all things that are not easily found elsewhere and contribute to an excellent quality of life.

Switzerland, Monaco, and Dubai are popular choices at the moment. These are small countries/states that are known for their low taxes, safety and world class standard of living. Dubai in particular has invested heavily in presenting an attractive option for global wealth with the absence of personal income and capital gains tax proving especially appealing for UK HNWIs in light of recent forecasts for the Autumn Budget.

My main advice to clients is to choose somewhere that gives them a good quality of life, where they align with the culture and lifestyle, as opposed to focusing solely on what’s currently the most economically advantageous.

Many governments are facing the same need to raise funds for public services at the moment and taxation is one of the most widely used methods to do so. As a result, I would imagine there will be an increase in taxation globally. For example, in Switzerland there are talks of increasing inheritance tax on HNWIs with a wealth of over CHF50m+.

There may well be an impact on certain prime property markets, for example small pockets of London where Non-Doms have typically resided and invested in real estate, such as Belgravia). However, there are still plenty of people who see the benefits of living in London and demand still outstrips supply for best-in-class assets in the capital.

We see that there could be a significant impact on prime property markets and the wider economy

Camilla Dell, Managing Partner at Black Brick

Are HNWIs voting with their feet and moving to other parts of the world? We haven’t seen this trend play out with our own client base, but that is because many of our clients are either UK resident and UK domiciled or overseas buyers and neither of these groups will be affected by these changes. We have heard from our many contacts within accountancy firms, immigration firms and private banks that some UK Res Non Dom clients are indeed choosing to leave with jurisdictions like Italy and the city of Milan proving popular.

The non-domiciled tax regime in Italy aims to attract foreign taxpayers to Italy. Income generated overseas will be subject, for each tax period, to a substitute tax set at a flat rate of €100,000. The regime lasts up to 15 years. The scheme has been running for since 2017 and has attracted 3,180 applicants so far. The issue with places like Milan and an extreme example Monaco which has zero tax on income or capital gains is the cost of property. We are hearing that prices in cities like Milan are now rocketing and there is a lack of supply for both rental and purchase. Monaco is the most expensive market for prime property, costing over $5,800 per square foot. The cost of real estate will inevitably put some people off moving.

We are advising clients who are thinking about moving to take careful advice from their team of tax advisors before making hasty decisions. Many UK Res Non-Doms are also not selling their primary residences in the UK preferring to keep a base in London in case things don’t work out as planned overseas. It could be a case for the “grass looks greener” only for families to realise they had a better quality of life and education here in the UK. At Black Brick we can help clients thinking of leaving and assist them in several ways – our Vacant Care Service may prove very useful for families leaving but keeping a home in London and we have also recently launched Black Brick International to assist our clients looking to buy abroad.

We see that there could be a significant impact on prime property markets and the wider economy if the UK loses a significant proportion of it’s UK Res Non Dom population who contribute significantly to the UK tax system.

What has been surprising is the number of HNWIs/UHNWIs (who are not non-doms), who are also thinking about other places to live

Mark Parkinson, Director, Middleton Advisors

In our recent experience, unsurprisingly some non-doms are considering their position while waiting to see the fine detail in the budget. What has been surprising is the number of HNWIs/UHNWIs (who are not non-doms), who are also thinking about other places to live and bracing themselves for a more burdensome tax regime over the next five years at least.

Italy is the much mentioned ‘destination of choice’- their scheme is not completely tax free and is pretty similar to our current scheme. Monaco, Switzerland, Greece, Dubai and Spain are all attractive options purely from a taxation point of view. Most people serious about leaving are currently deciding, what will prove to be the most popular will not just depend on the taxation regime; for families quality of life will be a balancing factor.

What are you advising clients who are thinking about moving? At the moment still to wait and see, there were a few areas of the announcement that were still up for consultation. There will still be a non-dom policy (by another name – FIG), which may attract some new and different type of ’non-doms’.

Arguably, it has already impacted the £5m+ property markets as many buyers at this level are ‘waiting and seeing’. If all leavers decide to sell their properties, then yes it will affect the prime markets. I suspect though, that many may wish to leave some equity in the UK prime property markets and will retain or rent their property.

The London market ultimately, is driven by broad macroeconomic factors

Marco Previero, Head of Research at R3Location

It is too soon to tell what the long-term impact will be for prime London market. The current uncertainty doesn’t help and could potentially slow things down from now until the budget. The London market ultimately, is driven by broad macroeconomic factors. It is considered a safe investment and the capital’s strength in key industries such as finance, media, legal and business sectors is a clear advantage.

If anything, the increased stability that a Labour Government will bring in the long term should provide a greater incentive to invest in Prime Central London, including to foreign investors.

Unlikely to fundamentally recalibrate the market

James Holroyd from Property Vision’s London office

Clients with kids in school have said they are not moving, they may restructure business ventures and expect to pay the tax on what they cannot change. Those who have greater flexibility have said they are either doing nothing until there is greater transparency and a timeline in place.

Others have said they will still buy but will lower the budget and have a smaller property. Others who already have a house here are planning  to move to one their other homes but still intend to keep their property in London as they will visit for the holidays and other trips.

This may impact pockets of the market, especially if one there is an oversupply at a specific price point, but in truth it’s unlikely to fundamentally recalibrate the market or indeed the wider economy.

We are by no means seeing the much-proclaimed exodus so far

Philip Harvey, Senior Partner at Property Vision

It is a huge topic of conversation and has caused some soul searching amongst our clients. We are currently helping them to work through the pros and cons of the alternatives through Property Vision International – our global network of associates. It’s important to balance tax, lifestyle and family implications. The feedback so far is that some with shallower roots here will probably go – but not all – and we are by no means seeing the much-proclaimed exodus so far.

Even if more than expected did leave, there’s plenty of demand to fill the empty spaces. The UK is a great place to live and most understand that current tax arrangements often only survive one term. Unfortunately for the new Chancellor those that do leave will include some seriously big taxpayers who simply don’t need the grief.

Longer term concerns surround the broadening of the inheritance tax net and the ability of HMRC to investigate offshore trusts. Second or third generation wealth with low UK income will look to protect the nest egg bequeathed to them, and that will mean moving out.

Traditionally Brits looking to shelter wealth went to Switzerland or Monaco, but both are an acquired taste, and many other countries now offer citizenship and residency through investment – which is far easier to achieve than by naturalisation. Money talks!

A month ago, I would have said that Italy was the number one destination for those fleeing the UK’s tax raid on non-doms. However, the ‘forfait’ (a fixed annual charge to avoid tax on worldwide income and gains) has just been doubled to 200,000 Euro. A clear indication that Italian tax take is not as certain as many hoped for.

It’s worth remembering that UK top tax rate sits mid table in the European league, so when short term incentives to move are withdrawn the UK doesn’t always look so bad. Italy’s top rate of personal income tax is currently 47.3%. Populism is pushing all governments in only one direction – remember it was the Conservatives who raised Stamp Duty to penal levels, created Brexit, and removed the non-dom status. Portugal and Spain’s desire to lure HNWIs has already succumbed to this.

Dubai has been attracting buyers and from a tax perspective, what’s not to like? There is no levy on personal income, but you must be tax resident to avoid the potential for taxation in other jurisdictions, and life in Dubai is not cheap, especially if you drink alcohol. It is also not a democracy and changes can be swift and made without consultation.

Some have gone to the Caribbean, particularly Antigua and Barbados from the UK. Both want to attract foreign investment, and each have their own charms. However, getting family to visit is not as easy as with European destinations and you have to remember the pace of change on each island is rapid.

Property Vision International was created to help those wishing to relocate get the very best advice in all aspects of their move. its worth remembering that tax havens with mature property markets (such as Monaco and Switzerland) tend to have low supply and be very expensive, whilst those with immature markets (such as Dubai and various Caribbean islands) tend to be fraught with potential hazards and a history of booms and slumps in value. Understanding the nuances of the property market (as well as planning and legal aspects of home ownership) should be as much of a consideration as tax rates.

In many areas of Switzerland for example, property renovations now have to be carried out in accordance with strict new sustainability laws which are landing many with considerable unforeseen costs. In some cases these can negate the overall value of a move.

The initial impact on the UK market will be the continued suppression of stock levels. The market is still normalising after the Covid spike, and many are waiting to see what measures are to be announced in the Autumn Statement. This leads many would-be sellers to question if now is a good time to sell? (i.e. would they achieve a better price next year).

It may also be true that the key question is not how many HNWIs are leaving the UK, but how many are now put off from coming here? Many who are leaving are doing so because they feel they are having something taken away from them, yet most who come to the UK do so because of the advantages they see in living in a civilised, grown up, multi-cultural and lawful society with great education and a temperate climate. Most financial analysts and economists also seem to agree that the UK is currently a good place to invest.

Ultimately, we do not believe the dial is going to change sufficiently on the supply and demand equation to create any significant reduction in high value property prices.