This report is from this week’s CNBC’s UK Trade e-newsletter. Every Wednesday, Ian King brings you skilled insights on crucial enterprise tales from the U.Ok. and the important thing personalities shaping the information. The e-newsletter can even spotlight different key developments within the U.Ok. that you just will not need to miss, plus a preview of important occasions which can be set to make waves. Like what you see? You’ll be able to subscribe right here.
The dispatch
For many of this century, the U.Ok. — and London specifically — has been one of the crucial well-liked locations for the world’s tremendous wealthy to stay, work and play in.
The U.Ok.’s method on this interval was finest summed-up by Peter Mandelson, a senior minister in Tony Blair and Gordon Brown’s Labour governments and now U.Ok. ambassador to the USA. In 1998 he advised a bunch of Silicon Valley enterprise leaders: “We’re intensely relaxed about folks getting filthy wealthy so long as they pay their taxes.”
Nevertheless, that’s now altering as the rich flee a punitive new tax regime, with doubtlessly extreme penalties for the nation.
Arguably this started when Russia invaded Ukraine in 2022 and tons of of Russian oligarchs left the U.Ok. after being sanctioned. This in itself was significant; the upmarket property agent Aston Chase estimated that, on the time of the invasion, some 150,000 Russians have been residing in ‘Londongrad’ proudly owning £1.1 billion ($1.5 billion) value of residential property.
However that was a particular Russian subject and aside from those that had profited from Russian exercise, few mourned their departure.
Issues started to alter extra broadly throughout the run-up to final yr’s normal election, when Jeremy Hunt, then Chancellor of the Exchequer, sought to steal the garments of his Labour rivals in his March 2024 Price range.
He introduced that, as of April 2025, the U.Ok. would abolish so-called ‘non-dom’ standing — a quirk of the tax system courting again to 1799, that allowed rich folks residing in Britain however who didn’t contemplate it to be their everlasting house, or ‘domicile,’ to pay U.Ok. tax solely on revenue earned in, or transferred to, the nation.
This had been a flagship Labour coverage and Labour had made hay from the truth that Akshata Murty, the Indian-born spouse of Rishi Sunak, the previous prime minister, was one in every of round 74,000 individuals who had loved non-dom standing in 2022-23 (the most recent tax yr for which figures can be found).
Hunt claimed changing non-dom standing along with his “easier, residency-based system” would elevate £2.7 billion yearly. Crucially, although, he selected to not topic abroad belongings positioned in offshore trusts by non-doms to U.Ok. inheritance tax.
When Labour received the election, in July final yr, newly-appointed Chancellor Rachel Reeves, determined she wanted to keep up the celebration’s management on the problem. So she abolished the exemption on offshore trusts — doubtlessly exposing your entire world wealth of those people to the 40% levy.
In a single day it turned the U.Ok. from one of the crucial engaging locations for the world’s wealthiest folks into one of the crucial costly locations on the earth to die.
The upshot has been an exodus of the tremendous wealthy.
Tremendous wealthy exodus
It’s exhausting to know exactly how many individuals have left. The analytics agency New World Wealth and the funding migration advisers Henley & Companions steered in March this yr that Britain had misplaced a web 10,800 millionaires to migration in 2024, up 157% on 2023 and greater than every other nation besides China.
Some dispute these figures, amongst them Stephen Kinsella, a authorized advisor and member of Patriotic Millionaires U.Ok., a nonpartisan community of British millionaires calling for a wealth tax. He advised me just lately the numbers have been an extrapolation based mostly on the variety of folks on LinkedIn who had stated that they had left.
He added: “There are about 3 million millionaires in Britain so, even when 10,000 had left, that may be about 0.3% of millionaires.”
Henley & Companions and New World Wealth printed a brand new report final week predicting that 16,500 millionaires would depart the U.Ok. this yr, greater than twice as many had been anticipated, representing the very best web outflow of high-net-worth people from any nation since they started monitoring millionaire migration 10 years in the past.
Road scene in Previous Bond Road, Mayfair, London, United Kingdom.
Pawel Libera | The Picture Financial institution | Getty Pictures
Though the precise numbers is not going to be identified till the U.Ok. tax authorities crunch the numbers some years therefore, there have been loads of straws within the wind. LonRes, which tracks exercise in London’s prime property markets, estimates there have been 36% fewer transactions involving such houses in Could this yr than in the identical month final yr. In the meantime, Corporations Home knowledge suggests greater than 4,400 administrators have left the U.Ok. within the final yr, with departures accelerating in latest months.
Amongst these leaving have been some very high-profile people, together with Richard Gnodde, the South African-born vice chairman of Goldman Sachs; Nassef Sawiris, Egypt’s richest man and co-owner of Aston Villa FC co-owner and John Fredriksen, the Norwegian-born transport magnate. Lakshmi Mittal, the Indian-born metal billionaire who commonly tops the rankings of Britain’s richest folks, is alleged to be weighing up his choices and is extensively anticipated to surrender his U.Ok. tax residency.
Compounding the issue is that different international locations are presently welcoming the wealthy with open arms. They embody Italy, the place Gnodde has relocated, which permits rich foreigners to pay an annual payment of as much as 200,000 euros to exempt their abroad belongings and revenue from tax. The highest vacation spot for migrating millionaires although, is the United Arab Emirates, now house to Sawiris and Fredriksen. The most recent Henley & Companions/New World Wealth report predicts it can appeal to a web 9,800 millionaires this yr.
None of this has but appeared within the U.Ok.’s fiscal forecasts. Certainly, the unbiased Workplace for Price range Duty nonetheless assumes Reeves’ transfer will elevate £2.7 billion in additional taxes a yr by 2028-29. It assumes that between 12%-25% of non-doms would go, which now seems an underestimate.
Analysis printed by the consultancy Oxford Economics in September final yr, based mostly on a survey of non-doms and their advisors, steered 63% would depart inside two years of the measure being applied. Survey apart, Oxford Economics expects as much as 32% of non-doms to go away and beneath that state of affairs, with non-doms having paid £8.9 billion in taxes in 2022-23, the coverage would begin costing the Treasury cash.
It’s not simply the foregone taxes such folks would have paid that may damage. 1000’s of jobs in sectors like retail, hospitality, authorized providers and luxurious items depend upon the continued presence within the U.Ok. of the previous non-doms. Scores of charities, cultural and sporting establishments depend upon their patronage and philanthropy. There would subsequently be a wider influence than simply the fiscal one.
Belatedly, the federal government has realized it has an issue. Sadly, it’s most likely too late to lure again these non-doms who’ve already gone, together with others who’ve left because of the imposition of VAT on faculty charges and adjustments in agricultural property aid and enterprise property aid that uncovered beforehand exempt estates and companies to inheritance tax for the primary time.
Nevertheless, the federal government can nonetheless act to cease additional departures. The best factor to do can be to revive the exemption from inheritance tax granted to offshore trusts. This may be problematic for Reeves, since taxing the rich extra is extremely well-liked amongst Labour voters, even when — as one ballot final weekend steered — it hurts the general public funds.
However the Chancellor wants to seek out a way of backing down with out it trying an excessive amount of like a U-turn. And, with many rich folks seeking to relocate in time for the beginning of the brand new faculty yr in September, she ought to most likely not depart it till her autumn Price range.
— Ian King
High TV picks on CNBC
Have to know
UK autos spared beneath U.S. tariff reduce however metal nonetheless in query. The U.Ok.’s commerce cope with the U.S. provides British vehicles a preferential tariff price over these imported from different elements of the world. However questions over a discount in tariffs on U.Ok. metals stay.
How BP turned a possible takeover goal. Market tongues have been wagging for weeks a few potential merger between Britain’s oil giants till Shell denied reviews that it is in talks to accumulate its rival. This is how BP turned a takeover goal.
Financial institution of England chief sees downward rate of interest pattern as UK hunts for development. BOE Governor Andrew Bailey advised CNBC that rates of interest ought to come down progressively as central banks juggle taming inflation and stoking elusive financial development.
— Holly Ellyatt
Within the markets
The U.Ok.’s FTSE 100 has resumed its march upwards by rising round 0.3% over the previous week, however continues to be 1.2% off from the document excessive reached in June.
In case you missed it, U.Ok. car manufacturing fell sharply for a fifth straight month in Could as headwinds, together with U.S. President Donald Trump‘s commerce coverage, hit the automotive business exhausting.
As well as, thieves are additionally doing their finest to ensure there are fewer vehicles on the highway within the U.Ok. A brand new research by the Royal United Companies Institute stated organized felony gangs are driving the surge in automobile thefts — the place automobiles are being stolen and shipped from the U.Ok. inside 24 hours.
The efficiency of the Monetary Occasions Inventory Trade 100 Index over the previous yr.
