Abolition of Non-Dom Status Could Cost Up To £111 Billion by 2035

If the Government enacts its plans to abolish non-dom status, this could cost the UK up to £111 Billion by 2035, and 44,000 jobs by 2030;

• These figures are based on on just over half (11,050) of of the 21,100 remittance basis non-doms leaving;

• If 7,094 non-doms leave the UK, a number suggested by Oxford Economics, the UK could face £32.4bn in lost growth by 2035, as well as 28,322 jobs by 2030;

• These figures are drawn from new analysis by the Adam Smith Institute, a leading economic think tank, ahead of the abolition of the non-dom status which is set to come into force this Sunday;

• This lost growth will be due to lower investment in capital, a drop in tax revenue, reduced consumption across the economy, and a corresponding loss of jobs;

• Non-doms are expected to leave for a number of reasons, including the abolition of their current tax status, increased taxes on High Net Worth Individuals (HNWIs), the UK’s poor economic outlook, and hostility towards wealth-creators;

• And on Wednesday, the ASI released research warning that the Government’s Finance Act will make the situation even worse than previously anticipated;

• It is in Britain’s interest to attract and retain as many non-doms as possible because they contribute billions each year through taxes and economic activity.

New analysis from the Adam Smith Institute (ASI), a leading economics think tank has today revealed the potential scale of the economic damage that may be caused by the abolition of the non-dom status. It forecasts that the UK could be facing up to £14.2 billion of lost growth every year by 2035, leading to a cumulative loss in the next ten years of £111 billion. It also showed that the UK could lose up to 44,415 jobs by 2030.

This is based on 11,050 of our 21,100 ‘remittance basis’ non-doms - those who are taxed only on income and gains made in the UK- leaving this country. 

The ASI  also modelled the exit of a ‘medium number’ (7,094) of non-doms leaving. We find that there could be a cumulative loss of up to £32.4bn in lost growth by 2035  and the loss of 28,322 jobs by 2030.

The ASI’s previous modelling had supposed that 5,800 would leave. However, based on new evidence which showed that 10,800 liquid millionaires left last year, and extensive consultation with financial advisors and accountants, the Institute believes that a far higher number have either left, or are in the process of leaving. We do not account for future leavers.

And as research released by the ASI on Wednesday warned, the Government’s Finance Act could make the non-dom exodus even worse than originally anticipated. This Bill will create a punitive and arbitrary set of rules for non-doms. Some non-doms could be charged an effective tax rate of 67% on their foreign businesses.They could also be charged additional taxation by HMRC on any income or capital gains brought over to the UK under the Government’s Temporary Repatriation Facility. A significant number of them may leave in the face of such uncertainty. 

This will have a serious impact on the UK economy. Non-doms contribute billions to the economy through taxes and spending. Their presence underpins public services, drives investment, and stimulates broader economic activity. The top 1% of earners, many of whom are non-doms, contribute 29.1% of total tax revenues. The Government has also said that abolishing the non-dom status would raise £12 billion. If the policy actually costs the UK these vast sums, then there will be a huge hole in the UK’s finances.

The ASI is calling on the Government to implement an Italian-style annual flat fee of £150,000 for wealthy UK residents who are not tax-domiciled. The policy could raise money while attracting more non-doms, generating further tax revenue and boosting the wider economy in the process. 

Maxwell Marlow, Director of Public Affairs at the Adam Smith Institute, said:

“The scale and pace of the exodus of wealth-creators is extremely alarming. What has been a trickle has now become a flood. 

This is going to have a severe impact on the UK economy. Fewer non-doms will mean reduced investment, a lower tax take, worse public services and fewer jobs. And, considering that the Government’s fiscal planning has been based on their assumption that abolishing the non-dom status will actually raise money, this could create a serious hole in the UK’s finances. 

The Government must act as a matter of urgency, by exempting non-doms from taxes on foreign profits, introducing an Italian-style annual flat fee and improving the UK’s business environment. A failure to do so would be an act of enormous economic self-harm.”

Methodology:

We have input the estimated number of non-doms leaving the UK into a Solow residual model. The ASI’s previous iteration of this model assumed that 5,795 non-doms would leave, on-par with Denmark’s exodus of wealthy individuals when a similar regime was abolished. However, given recent news about over 10,000 millionaires leaving the country, we have increased our input. 11,050 is the number of non-doms we have allocated for exit, having either already left or are in the process of leaving. Having undertaken qualitative engagement with law firms and non-doms, we can make a credible assumption that the increased number of non-doms leaving the UK. Given the high rate of millionaire exodus last year.  This model does not account for future non-dom exodus. The cumulative output is the addition of each year’s lost growth amount until 2035.

The ASI’s Solow residual model provides an easy‑to‑grasp framework that shows the direction and rough scale of economic changes from the ongoing non‑dom exodus. It does so by simulating how the UK’s workforce and capital stock shrink in response to the departure of high earners - and how that affects the long‑term growth path of the economy. The precise numbers are approximate as we cannot verify the exact earnings and investment of every single non-dom, but the model is useful for illustrating the possible magnitude and consequences of non‑dom flight in an organised, transparent way.

The much higher figures provided by the ‘high exodus’ model are the result of the compounding effect of more non-doms leaving - GDP falls faster as more consumption leaves, as well as foregone investment in the economy as non-dom investors leave, meaning there is a lower tax base and less government spending.

We did not use HMRC statistics as this dataset was last updated in July 2024, and is unlikely to be updated until July 2025.

Notes to editors:  

Maxwell Marlow is Director of Public Affairs at the Adam Smith Institute.

Mitchell Palmer is a Research Associate at the Adam Smith Institute and previously a Ministerial Advisor to the Hon. David Seymour MP, New Zealand’s Minister for Regulation.

The Adam Smith Institute (ASI) has recently released its Millionaire Tracker, which calculates the proportion of the population who are millionaires and forecasts how this will change over time. It projects that the share of the population who are total millionaires will decline from 4.55% to 3.62% before the end of this parliament, representing a 20% decrease.

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