Britain tries to fix frayed relations with world’s rich

LONDON – Tech billionaires, the owners of Premier League football teams and heirs to some of Europe’s oldest fortunes all recently left Britain because of higher taxes.

Now, Britain’s finance minister is quietly trying to put a halt to the wealth and brain drain.

Britain’s Chancellor of the Exchequer Rachel Reeves’ Budget on Nov 26 sought to curb the most controversial part of scrapping preferential tax treatment for wealthy residents hailing from overseas, known as non-domiciled individuals, who range from bankers to multi-billionaires.

The British government announced a limit on how much inheritance tax former non-doms could face locally on their global wealth.

A £5 million (S$8.57 million) limit per decade on certain trust structures applies retrospectively from the same month of Britain’s non-dom regime ending in April, making private wealth advisers see it as a way of curbing the changes’ most punitive effects.

In addition, budget documents also revealed plans to explore a “tax offer” to help attract high-talent individuals, in a pair of new policies that could help to restore Britain’s relationship with the global elite after Ms Reeves’ first Budget in 2024 caused many to consider life outside Britain.

“These two measures appear to be an acknowledgement that the changes announced in last year’s budget to the non-dom regime went too far,” said Mr Marc Acheson, a global wealth specialist at Utmost Wealth Solutions. But “question marks remain as to whether these measures will be effective”.

The changes may not be enough to tempt back many of those that have already left the country and also offer a particularly pointed contrast with Labour’s messaging that those with the broadest shoulders will bear the brunt of the tax changes, given the new tax break on trusts favours larger fortunes.

A representative for the British Treasury didn’t immediately respond to a request for comment.

The moves signal a climbdown in some ways from several soak-the-rich measures outlined at Labour’s first Budget for more than a decade in October 2024, following Prime Minister Keir Starmer’s party sweeping to power with a manifesto targeting a crackdown on non-doms’ tax “loopholes” for their wealth.

Business Secretary Peter Kyle signalled a growing recognition of Britain’s wealth turmoil earlier this week, acknowledging that tax hikes in last year’s Budget had led some ultra-rich residents to leave. In the Nov 26 announcement, there are higher levies for well-heeled British natives as well.

While Britain still remains a global wealth hub, the problem now facing Ms Reeves is whether she’s already inflicted too much tax pain on a globally mobile group of deep-pocketed individuals, especially as rival nations offer their own tax incentives.

Billionaires such as Checkout.com founder Guillaume Pousaz, Revolut chief executive Nik Storonsky and Egypt’s second-richest man Nassef Sawiris have already exited Britain amid the scrapping of its non-dom system that allowed tax breaks on overseas wealth for as long as 15 years.

Some wealthy individuals are coming to Britain amid immigration turmoil in other nations, such as the US under President Donald Trump. But they may not be enough to counter the outflow.

Overall, individuals who already left Britain control or share part of fortunes totalling at least £90.9 billion, according to the Bloomberg Billionaires Index, with further departures emerging earlier in November amid reports of Ms Reeves exploring a so-called exit tax on the assets of those exiting the country.

“They’ve continued to leave,” Mr Mark Davies, founder of a tax advisory firm for ultra-wealthy individuals, said on the British non-dom population. “Departures were accelerated by the fear of the leaked exit charge provisions, which were clearly a possibility but decided against.”

Non-dom tax status dated back to 1799, when it was introduced to protect colonial investments. Under the now-scrapped system, claimants could initially hold the status without any extra charges, but eventually faced annual costs of as much as £60,000 if they continued to reside in Britain.

Britain has now brought in a four-year system based on residency instead of the typically more complex concept of domicile, even as nearby nations such as Italy and Greece have brought in similar regimes within the past decade that offer longer time-frames as with Britain’s former non-dom regime.

Mr Starmer’s administration is betting its non-dom reforms will bring in more than £30 billion in extra taxes over the coming years. A wave of British think-tanks are contesting those figures, however, warning of the threat to jobs and economic growth. The four-year timeframe for the replacement non-dom system is also often seen as making the UK a temporary destination for wealthy individuals.

“They should have stayed at the 15 years,” British billionaire John Caudwell said in an interview with Bloomberg. “One of the reasons you want to come is for your child’s education” and, taking longer than four years, “you want them to continue right the way through the school system”.

Many who claimed British non-dom status have relocated or have made plans to do so because of a single issue: Labour’s decision to remove inheritance tax breaks on assets held in overseas trusts in 2024’s Budget, going further than plans outlined in March 2024 by the then-ruling Conservative Party.

Labour’s measures included a 10-year residency timeframe before non-doms’ global assets entered the crosshairs of UK authorities for inheritance tax rates as high as 40 per cent, one of the highest among developed nations, causing some of them to leave before the 2025 changes kicked in.

The British Treasury expects the cap on inheritance tax charges for trust structures announced on Nov 26 will help “retain” former non-doms as residents, according to a policy document. The question is whether it will be attractive enough to bring back many of those who’ve started to put down roots overseas.

“That horse has bolted,” said Mr Bobby Console-Verma, a former investment banker and founder of 1fs Wealth, a London-based financial technology firm that helps ultra-high-net worth individuals manage their assets. “A lot of the wealthy have felt they’re not welcome” in Britain.

The British Treasury also unveiled a consultation on Nov 26 to support entrepreneurship, stoking hopes of Britain opening up more to the global elite even as it hikes taxes on using private jets.

Mr Starmer’s administration has already started exploring a new investor visa for rich foreigners, Bloomberg News reported earlier in 2025, while the British Treasury said on Nov 26 it will seek views in “due course” to help attract globally mobile individuals to relocate themselves to Britain.

Home Secretary Shabana Mahmood separately unveiled a new fast-track path to residency for high-earners last week, with a consultation on the measures open until early 2026. In the meantime, she and other senior Labour figures will hope for fewer exits of former non-doms.

“Our global competitiveness is being tested,” said British lawmaker Nosheena Mobarik, who wrote to Mr Starmer, Ms Reeves and Ms Mahmood in November on stemming the nation’s wealth drain. “We must turn the tide.” BLOOMBERG