Rachel Reeves’ flagship plan to overhaul Britain’s non-dom tax system is facing an early setback after new analysis found far more wealthy residents have left the country than the Treasury forecast.
According to consultancy Chamberlain Walker, around 1,800 non-residents have left the UK since the Chancellor scrapped the system in April 2025 – 50 percent more than expected.
The analysis raises questions about whether the policy, which is expected to raise £34 billion over five years, will deliver the expected boost to public finances.
Non-residents – or non-doms – are people who live in the UK but declare that their permanent residence is abroad. Under the old system they could avoid paying British taxes on income and assets abroad by paying a fixed annual fee.
Reeves replaced that system in April with a new system that she said would make taxation “fairer” and ensure that “those making their lives in the UK pay their fair share.”
However, Chris Walker, founding partner of Chamberlain Walker and a former finance and DWP economist, said official data underestimates the true scale of departures.
“The Treasury Department is effectively blind to the behavior of the most responsive group of non-doms,” he said. “The richest are investors rather than employees, so they don’t always appear in HMRC’s records. The impact of their departures on tax revenues is significant.”
Walker’s analysis suggests that many of the expatriates are among the UK’s highest earners – people who typically pay tens of millions a year in income and capital gains taxes.
The Treasury rejected the figures, saying they were based “on anecdotal evidence that we do not know.”
A spokesman said: “If you are a resident of the UK, you should pay your taxes here. That’s why we have abolished non-dom tax status – to invest in our public services, including the NHS.”
Contrary to the official line, the consultancy’s findings have fueled fears among business groups that a growing number of high-net-worth individuals are moving their assets – and their tax residency – abroad to avoid stricter regulations.
The UK’s non-dom population peaked at almost 80,000 in the mid-2010s, but has fallen steadily since a series of reforms under George Osborne and Rishi Sunak.
The latest exodus coincides with reports from luxury brands and wealth managers that wealthy clients are leaving the UK.
Last week, Ferrari’s chief executive told the Financial Times the company had “limited car supplies to the UK” and feared “some people are opting out for tax reasons”.
Private financial advisors in London have reported an increase in requests to move to Dubai, Milan, Monaco and Singapore since the spring.
Critics of the reforms warn that the Treasury will lose more revenue than it gains if many wealthy residents move.
Reeves has dismissed warnings of an exodus, telling the Guardian last week: “This is a brilliant country and people want to live here.”
Proponents of the reform argue that the abolition of the preferred non-dom system is long overdue and that fears of mass exodus are overblown.
But economists say even small changes to the residency permits of high earners can reduce returns to the state coffers. The top 1 percent of workers account for almost 30 percent of Britain’s income tax revenue, meaning any shift in residence can have an outsized impact on earnings.
The controversy comes to a head as the Chancellor faces increasing fiscal pressure ahead of the Budget on November 26, which will see her need to find up to £30 billion in savings and tax rises to meet her budget rules.
If the number of non-doms leaving continues to rise, Reeves could find it difficult to generate the promised revenue from her “fair taxes” agenda – and new questions could arise about whether the reform has cost the Treasury money rather than increasing it.
