The British government has completely abolished tax privileges for non-domiciled residents, and the number of wealthy individuals leaving London has surged recently. This has raised concerns that the United Kingdom's "wealth tax increase" policy could lead to a national economic loss.
According to Bloomberg on Nov. 11 (local time), the British government abolished tax benefits for non-domiciled residents that had been maintained for over 200 years in April. Non-domiciled residents refer to those who reside in the United Kingdom but do not have their legal domicile in the UK. The previous tax law provided certain tax exemptions for individuals who do not have British nationality but reside in the UK and earn income, but under the recent revision, non-domiciled residents are now subject to the same tax obligations as regular residents.
As a result, there has been an exodus of the wealthy living in London seeking tax benefits. Billionaire Guillaume Pousaz, founder of the online payment system company Checkout.com, and Egypt's richest man, Nassef Sawiris, recently left London, transferring their corporations' headquarters to Monaco and Abu Dhabi, respectively.
An analysis of 5 million documents from the UK Companies House by Bloomberg revealed that over 4,400 corporate executives relocated their residence overseas in the past year, with a 75% increase in those reporting a change of residence in April, when the tax benefits were abolished, compared to the same month last year. This marks the highest figure in the last four years.
It is estimated that a significant number of individuals who have not yet migrated are planning to do so. According to reports from private equity firms, law firms, and accounting firms in London, there has been a surge in immigration consulting and tax avoidance advice aimed at the wealthy in recent months. Legal and tax industries in the area indicate that up to 66% of non-domiciled clients have either already left the UK or are contemplating migration. According to the Bloomberg Billionaires Index, the total assets held by these individuals amount to $110 billion (approximately 150 trillion won).
The backdrop of this mass exodus is the Labor Party's key policy of "wealth tax increase." The Labor Party projects that the elimination of tax exemptions for non-resident homeowners could secure tax revenue of about £33.8 billion (approx. 59 trillion won) over the next five years. However, there are significant concerns among the tax industry and asset holders that the adverse effects may be far more serious.
In fact, London's status, once considered a "global elite sanctuary," is rapidly diminishing. The British government has previously encouraged economic and charitable activities of entrepreneurs and the wealthy through tax exemptions on overseas income. According to UBS Group, the UK ranks third in the world for the number of individuals with assets over $3 million (approximately 4 billion won), and non-domiciled residents, accounting for about 0.1% of the UK population, are estimated to have contributed over 1% of the total government revenue. This acceleration of their exit is why projections of a revenue shortfall have arisen.
The departure of the wealthy is affecting the overall economy of London. Client hotel operators are facing customer loss, and major real estate transactions in central London, where non-domiciled residents had been actively entering, are stagnant.
To mitigate the shock, the government is devising measures such as reviewing the reintroduction of high-net-worth investor visas, but analyses suggest that the change in perception surrounding London has already reached a point of no return. Leslie McCloud Miller, representative of Foreign Investors for Britain, noted, "Trust in the British government is already widely diminished."
Wealthy individuals leaving the UK are heading to Monaco, Italy, Switzerland, and the UAE. In response, some countries are implementing their own systems to attract the wealthy. For instance, Italy is emerging as a new base for private equity executives through a program that exempts local taxes on overseas revenue for 15 years.
Mark Hunter, a lawyer involved in immigration consulting, stated, "People are now already planning clear exit strategies when entering the UK," and added, "The UK is no longer an attractive long-term residence."