The Chancellor has been warned that she is going into the November Budget “flying blind” after new analysis suggested far more non-residents have left the UK than the government expected and billions of pounds of expected tax revenue are now at risk.
In a report published today, economic consultancy ChamberlainWalker says early evidence suggests a significantly larger exodus of non-doms following the abolition of non-dom status in April 2025. The company argues that assurances from the Treasury – based on HMRC’s payroll records – that departures are broadly in line with forecasts underestimate the scale of the outflows, as many of the wealthiest non-doms are investors rather than employees and are therefore not in PAYE data.
ChamberlainWalker points out that the government’s forecast revenue from the reforms is €34 billion.
Chris Walker, founding partner of ChamberlainWalker and a former government economist, said: “It is worrying that the Chancellor is going into the Budget with so little understanding of the fiscal implications of non-dom status reform. The Treasury is effectively blind to the behavior of the most responsive group of non-doms.”
The report argues that who goes is more important than how many. If exits occur in favor of the wealthiest non-doms – particularly former RBC payers – the impact could be a “triple whammy” to revenues:
- A bigger-than-expected hit to the UK’s income tax base as top payers leave.
- A lower FIG tax base than shown in the model, as high earners take foreign income and profits abroad.
- Reduced revenue from the Temporary Repatriation Facility (TRF) as fewer assets are brought ashore.
The consultancy also notes that official reassurance from real-time payroll data is inherently limited at this time. Behavioral responses to tax changes tend to have an impact over several years; ChamberlainWalker expects much of the adjustment to occur within two years of implementation, i.e. by April 2027.
HMRC’s upcoming review of the reforms is expected to publish more detailed data, but the report claims current sources cannot “meaningly capture” the true impact – particularly for investor-type non-doms. On this basis, the authors call on ministers to exercise caution and consider interim adjustments to strengthen revenue security and competitiveness as the evidence improves.
Pre-reform modeling assumed that 25% of non-doms with trusts and 12% without trusts would leave, representing around 1,200 departures in 2025/26. It was also assumed that 7,700 non-doms and dedicated doms would be worse off (and therefore generate the bulk of the additional FIG tax), with 14,200 eligible for four-year FIG tax relief and therefore initially no worse off. ChamberlainWalker’s estimate that 1,800 have already left suggests that the official tally could veer significantly off course as the composition of the leavers trend upwards.
With the budget still weeks away, the political and financial risks are clear. If the exodus accelerates – and continues to be concentrated among the richest – the Treasury total could reach $34 billion.
