Just how many non-doms are leaving the UK?
Since the Chancellor announced her non-dom crackdown, advisers, campaign groups and economists have warned an exodus of wealthy foreigners is afoot. But after a report claimed that departures were less extreme than feared, Ali Lyon digs into the data.
There are lies, damned lies, and statistics.
Popularised by Mark Twain, the phrase describes people’s tendency to cherry pick from data to bolster an argument they were already intent on making.
Just this month, Donald Trump fired the boss of America’s most important economic data agency, accusing her of “rigging” jobs data to make him – and his Republican party – “look bad”.
Closer to home, there have been few areas where the witticism has been more painfully evident than across one of the year’s most salient economic debates: just how many wealthy foreigners have left – or are leaving – the UK in the wake of Rachel Reeves’ decision to abolish the non-dom regime in the Autumn Budget?
Ever since, and indeed long before, Britain’s first female Chancellor ploughed ahead with Labour’s promise to end the centuries-old tax status, ranks of accountants, advisers and lawyers have been warning it would cause their well-heeled, footloose client base to flee.
It was even the catalyst for the formation of the UK’s first ever non-dom lobby group, which has campaigned doggedly, if unsuccessfully, to secure a U-turn or replacement scheme from the government.
But a paucity of official data has meant officials, economists and journalists have had to rely on a sub-optimal blancmange of anecdotal evidence, unempirical studies and, most recently, official numbers briefed to the media which only show part of the story, to establish what is going on.
Foreign Investors for Britain, the aforementioned lobby group, has itself commissioned a series of useful – albeit not wholly statistically significant – papers from the independent data firm, Oxford Economics.
Each polled non-dom members – and their advisers – on how close they were to leaving and the key factors driving them away. They also collected potential solutions that respondents suggested might simultaneously manage to keep them in the UK and ensure they contribute more to the UK’s creaking public finances than under the outgoing regime.
Unreliable data on non-doms
These findings have been accompanied by a smattering of research from relocation experts like Capgemini and – most controversially – Henley & Partners, whose ‘Wealth Migration Reports’ have been the subject of intense scrutiny. While the studies reflect a growing bank of anecdotal evidence, their methodologies have been found wanting. In lieu of other data points, Henley & Partners’ ‘Wealth Migration Reports’ – for example – relied in part on individuals’ stated locations on Linkedin when it warned the UK had lost the most millionaires of any country in the world in 2024.
The steady stream of these papers, warnings and individual departures becoming public has naturally triggered fears that an exodus of non-doms – and indeed wealthy individuals more generally – from the UK was afoot, and that the fiscal picture was worsening with every departure. But it has also sparked an impassioned rearguard action from campaigners and think tanks from the other side of the political divide.
Some – understandably – have sought to question the shaky data on which a portion of the ‘pro-exodus’ narrative is based. Others – less understandably – have jumped with alacrity on data which suggests those warnings are overdone, wilfully ignoring the fact that their numbers of choice also suffer from methodological flaws.
All of which is to say, absent official data – data that won’t surface from our pedestrian tax authority until 2027 – we have been forced to rely on a thin gruel of partial numbers hand-picked by both sides of the political divide.
This phenomenon was especially evident in the aftermath of a newspaper report that surfaced last week. Citing unnamed sources who had been “briefed on findings” of an HMRC data scrape, the story revealed that payroll numbers had found no evidence to suggest that more non-doms left Britain than official forecasts had predicted.
Roughly a quarter of wealthy foreigners with foreign-held trusts – the cohort most affected by Labour’s more draconian interpretation of the Conservatives’ similar policy – had left in response to the Chancellor’s maiden budget, it said. This was, the report continued, in line with unpublished Office for Budget Responsibility (OBR) predictions – cited but not shown – about the number of departures.
Unsurprisingly, it solicited a flurry of follow-up stories and statements from voices who had always wanted to be sceptical of the exodus narrative. Fears of a tidal wave of non-dom departures had been overblown, they argued; a confection of the media and non-doms’ advisers, eager for the exposure a punchy intervention would earn them.
But leaving aside any philosophical debate over what constitutes an ‘exodus’ (a quarter leaving the UK in just a few months is not insignificant, no matter how it is framed), experts have pointed to several flaws in the report. Much like the opposing Henley & Partners research that preceded it – unnamed government officials responsible for leaking the story were leaning on convenient numbers rather than necessarily accurate ones.
Payroll numbers must ‘be carefully questioned’
Dominic Lawrance, a partner at Charles Russell Speechlys, said the story’s reliance on payroll data means it “needs to be carefully questioned”.
In using numbers from PAYE tax receipts, it only tracked the number of non-doms paying income tax up front, in the same way any worker on a full-time contract would. It could be a useful – albeit still flawed – early indicator as to how many non-doms were leaving, but only if all non-doms worked in salaried jobs.
But according to Lawrance, “many of the wealthiest and most economically significant non-doms are not employees at all”.
“Many are successful business owners and choose not to take a salary, others generate their income overseas or from other sources,” said Kate Johnson, private client partner at Wedlake Bell.
Arun Advani, a senior academic from the University of Warwick whose research helped form the intellectual bedrock of Labour’s non-dom policy, believes approximately 80 per cent of non-doms will receive at least some income.
“Most remittance basis users [a category of non-dom who paid £90,000 a year to keep all their foreign assets and gains outside of HMRC’s orbit] have some earnings, with roughly four out of five appearing in the PAYE data,” he told CityAM.
This, he added, leaves an “important minority” who would not appear in PAYE data, albeit one whose tax bills are likely to be lower.
“Those on payroll will tend to be bigger taxpayers – a superstar banker will typically pay more tax than someone living off a trust,” he said.
That notwithstanding, several wealth advisers – including David Lesperance, founding partner at tax advisory Lesperance & Associates – have warned that, by definition, salaried non-doms are likely to have more ties to the UK, making them less likely (or slower) to leave. Thus, a greater proportion of the 20 per cent not included in the payroll data, will have quit the UK.
“A ‘millionaire’ non-dom dentist in Manchester has a significant amount of life inertia,” he told CityAM. “Along with having their entire client base within 10km of their office, they probably own a dental clinic and have significant capital investment in difficult to move equipment.
“In comparison a centi-millionaire non-dom is less likely to have to remain in the UK to make and maintain their wealth.”
“When this group looks at the loss of the remittance basis but more importantly the IHT hit in the October Budget, they are much more likely to leave,” he added.
Lesperance’s is a conclusion with which Lucy Woodward, a partner in City auditor Saffrey’s private wealth team, agrees.
“‘The ultra-high-net-worth, high-profile cases of departing non-doms typically won’t be working under PAYE therefore will not be reflected in PAYE record,” she said.
Anecdotal evidence points one way
Above and beyond whether payroll data is an accurate picture, there are even questions in Whitehall over whether HMRC is able to collect the payroll numbers in question.
“The data doesn’t exist… the analysis won’t have been done. And if it has, it won’t have been shared with the Treasury yet,” one senior official said. HMRC did not deny the claims when CityAM put them to the tax authority, and declined to comment.
In lieu of any reliable, accurate data, anecdotal evidence – like plummeting super-prime property valuations and a dearth of work for London-based butlers – has become important.
In that realm, the direction of travel has constantly pointed towards a substantial number of former non-doms choosing to leave in the face of the changes.
“Almost all the sellers in luxury London property are non-doms looking to leave,” one buying agent for high-end foreign nationals told CityAM.
And Magda Wierzycka, a Polish-South African entrepreneur who this month ploughed ahead with plans to leave the UK having lived in Britain since 2017, told this newspaper of one drinks party she attended in London where 45 of 50 attendees had either technically left already or were planning to do so soon.
“One friend [one of the richest men in South Africa, who was based in the UK] called me last week asking to go for dinner. I thought, ‘Absolutely, we’re neighbours,'” she said in the same interview in the aftermath of the Autumn Budget.
“And he says to me, ‘No, I’m in Geneva. I’ve relocated to Geneva.’”
Anecdotal evidence must – of course – be treated with a handful of salt, too. But if Mark Twain made it fashionable to hold a magnifying glass up to the tyranny of shoddily compiled statistics, it was another household name – less renowned for his contribution to the English language – who produced an illuminating line on what to do when stats and hearsay appear to diverge.
“When the data and the anecdotes disagree,” Jeff Bezos said in 2023, “the anecdotes are usually right.”
“It’s usually not that the data is being miscollected. It’s usually that you’re not measuring the right thing.”