Research by Pinsent Masons shows that China* (17,100 non-doms), the United States (17,000 non-doms) and Australia (13,060 non-doms) are the top three nationalities for non-doms living in the UK last year** according to Pinsent Masons, the multinational law firm. (see table below).
Amy Roe, Associate at Pinsent Masons, says that the UK has long been a popular country for people from China and Hong Kong to relocate to. In particular the number of people arriving from Hong Kong has risen since the creation of the Hong Kong British National (Overseas) visa in 2021.
Amy Roe adds that the people likely to be hit hardest by the new non-dom regime are non-doms who have domicile in lower tax jurisdictions, such as Hong Kong, Singapore, the UAE and Qatar. These individuals would normally pay much lower rates of tax, or even no tax on their income and capital gains arising in those countries. Under the new system, this income or capital gains may now be subject to UK taxation.
Says Amy Roe: “UK non-doms from jurisdictions like Hong Kong, Qatar and UAE are also likely to see their tax bills rise sharply under the new system. There will likely be assets that would normally go untaxed in their home countries that will be now be taxed in the UK.”
Many of the non-doms from the US are likely to be working in London’s tech and financial services industries, which attract highly-paid and highly sought after talent from around the world.
“The success of the UK’s tech and financial service sector is partly based on bringing the best global talent and leadership to the UK. There are concerns that ending the non-dom status could undermine this.”
“With such a large number of non-doms from the US and other countries who work at senior levels in the City and in the UK’s tech and fintech sector, there have been concerns raised that the end of the non-dom status could lead to a ‘brain drain’.”
“Many of them are open-minded about where their European base is. If they think that it makes more sense for them to take a role in Paris, Milan, Zurich or Frankfurt then they will.”
Pinsent Masons says that many people with non-dom tax status have been making plans to live elsewhere, with rumours that the status would be scrapped having intensified over the last year.
This was confirmed on July 29, with the new Government announcing that the UK’s non-dom regime would end in April 2025. Amy Roe says that non-doms are by definition internationally-mobile and many are able to quickly leave the UK if they choose to do so.
Although the new Government has announced that a temporary facility will be available under the new non-dom regime to allow a lower tax rate on certain income/gains for a limited period, the tax rate and length of the facility is yet to be confirmed. As the new tax year is fast approaching, this lack of clarity makes it even more likely that non-doms will choose to leave quickly.
Says Amy Roe: There have already been non-doms leaving the UK over the last couple of years – they could see the way things were going long before the Government announced anything. This will undoubtedly accelerate now non-dom status has been scrapped.”
“The lack of clarity over a transition period will be a significant problem for a lot of non-doms who might otherwise have stayed in the UK. More non-doms will leave as a result.”
Non-doms from France, Australia and NZ leave UK
The highest number of non-doms to leave the UK in the past year were from France (340 departures in the year to March 31 2023), Australia (560 departures) and New Zealand (290 departures)
The research from Pinsent Masons also shows that Hong Kong is one of the few jurisdictions that has seen an increase in non-doms in the past year, along with Portugal, China (excluding Hong Kong), Saudi Arabia and the UAE.
* Includes both mainland China and Hong Kong
** Year end March 31 2023. Source: HMRC
