The proposed reforms aim to replace the current system for non-doms, which allows tax avoidance on overseas income for up to 15 years, with a new limit of four years. This significant change is intended to address unfairness in the tax system, but it carries the risk of a substantial exit of wealthy individuals from the UK. As the Office for Budget Responsibility has indicated, while the reforms are predicted to generate considerable tax revenue, actual figures could greatly diverge based on taxpayer behavior.
Chris Etherington from RSM cautioned about the potential consequences of the new tax regime, stating: "If we see large numbers of non-doms leaving the UK, the Chancellor's forecasts may not hold up. These proposals appear to be influenced more by political motives rather than sound economic research, raising concerns about their actual effectiveness in achieving the intended financial outcomes for the government."
According to the survey by Oxford Economics, as much as 32% of the non-dom population might depart due to the tax reforms, which could lead to a shortfall of around £0.9 billion in tax revenue by the 2029-30 fiscal year. The survey also revealed that a significant majority of non-doms, 63%, are considering leaving the UK in the near future, highlighting the potential extent of the tax regime's impact on the UK's wealth retention.
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