When the abolition of the UK resident non-domiciled (RND) tax advantages was confirmed in March 2024, most commentators foretold a dramatic departure of wealthy individuals from the UK. Indeed, private wealth advisors were aligned with such commentators in raising significant fears that many of the UK’s most wealthy individuals might seek alternative jurisdictions and relocate themselves and their families. Early analyses from wealth management firms pointed to a potential surge in millionaire emigration, with forecasts suggesting up to 9,500 millionaires might have left by the end of 2024. The significance of this would likely mean that rather than these tax changes increasing the overall tax take of the Exchequer, tax revenues might in fact fall, especially when factoring in the significant spends of such families and associated indirect tax (VAT).
These concerns were well trailed, and many hoped (but probably never really believed) that Chancellor, Rachel Reeves, might row back and ameliorate some of the more draconian impacts of the proposals to avoid the risk of potentially losing valuable capital. However, it came as no surprise to most that in her first Budget at the end of October 2024, she chose instead to double down on the RND changes in her pursuit of (what she considers to be) a fairer and more transparent tax system.
Research by Arun Advani at the University of Warwick (CAGE, 2024) carried out previously revealed that earlier reforms to RND “privileges” resulted in only a modest 6% rise in emigration among those affected, with those that stayed contributing more in tax. There are those that would argue that this evidence casts doubt on the likelihood of an immediate, large-scale flight triggered solely by the 2024 abolition, especially given that high net worth individuals often cite personal and professional motives—ranging from family commitments to lifestyle preferences and global business opportunities—as key drivers in any relocation decision (Lombard Odier, 2024). However, previous changes have only tinkered with the favourable RND rules. In contrast, Rachel Reeves’ changes did away with them…
So, who is right? And has the forewarned mass exodus begun? With 2025 only just having begun, it is too early to know whether the worst fears of many in the industry have materialised. However, preliminary figures certainly suggest an uptick and coupled with anecdotal evidence of many private client advisors (who are advising more of their clients than ever about strategies and planning for leaving the UK), it is surely the case that the impact will be greater than at any time in the past. Notwithstanding this, determining the precise impact of the RND abolition will remain challenging. Isolating the causative effect of the changes to RND tax rules is extremely difficult, with other factors, like the UK’s ongoing economic uncertainties and heightened reliance upon quantitative easing (that may stifle innovation and entrepreneurship and further undermine the UK’s competitiveness) meaning that many HNW individuals may simply look elsewhere in any event—whether that’s through leaving the UK, or just choosing not to come to the UK in the first place (it is noted that the UK has slipped down the Henley Passport Index compared to rising contenders such as Singapore (Spears Wealth Management, 2024)).
In practice, only time—and significantly more definitive data—will allow a proper analysis and conclusion as to whether the dire warnings of a significant millionaire exodus resulting from the removal of the tax advantages afforded to RNDs were overblown or prescient.
