Non-dom departure Dubai and Switzerland welcome exiled rich

Even before the Chancellor formally announced plans to abolish Britain’s non-dom tax regime in the Spring Budget, the super-rich were gearing up to leave.

“I spoke to a client on Wednesday morning and his view was very much that if things didn’t go according to plan then he would leave,” says Rachel de Souza, partner at RSM.

For this client, the solution was easy – he already has a property in the Caribbean, says Ms de Souza, and plans to decamp.

It is likely to be just the start of a mass departure. Advisers say lower tax regimes around the world such as Dubai, Italy and Switzerland are about to get an influx of high net worth individuals as Britain’s non-doms scramble to restructure their finances in the wake of Jeremy Hunt’s Budget measures.

Under Britain’s current system, people who live in the UK but have a permanent home abroad (known as non-domiciled, or non-doms) get a big tax perk. They can opt to pay tax on overseas earnings on a “remittance basis”. This means they are only charged UK tax on this income if it is brought (or “remitted”) into the country. In other words, they save a lot of money.

Now this system is to disappear. In a move that will raise £2.7 billion per year in extra taxes by 2028-29, Mr Hunt announced in his Spring Budget that he will scrap the remittance system from April 2025. This means non-doms will have to pay more tax.

“Without a doubt there will be some that go – and my expectation is the ones that go will be at the wealthier end of the spectrum,” says Ms de Souza. “These people already have homes overseas. For them, it’s really quite easy. They don’t need to go through a process of deciding where to go, buying a house, furnishing a house. It is just a question of buying a plane ticket.”

Switzerland and Dubai are the two places most popular with those looking to relocate for tax purposes, says Ms de Souza.

Dubai has no personal taxes whatsoever, while non-tax residents in Switzerland pay tax only on Swiss sources of income and wealth.

“When Norway introduced the wealth tax their billionaires all upped and left and they went to Switzerland,” says Christopher Groves, a partner at high-end international law firm Withers.

The impact of Mr Hunt’s policies could extend far beyond the international elite.

The regime change might also encourage British people to leave for inheritance tax purposes, Chris Etherington, private client partner at RSM, said.

Scrapping the concept of domiciled for tax purposes will likely mean that tax will be tied to residency. “People in their 70s may become much more inclined to leave the UK. It’s not confirmed, but it looks like if they leave the UK then they will be outside the inheritance tax net entirely.”

Perhaps it will not just be the super-rich jetting off for sunnier climes after all.