I missed this in the Financial Times from 30 July:
The number of “non-doms” [in the UK] dropped by less than 1 per cent immediately after UK ministers confirmed the end of the favourable tax status, further undermining claims that tougher rules would trigger an exodus of wealthy individuals.
About 73,400 individuals claimed non-domiciled taxpayer status in 2024-25, a fall of 0.5 per cent or 400 compared with the previous year, according to figures published by HM Revenue & Customs.
The decrease reflected roughly 8,600 “newly arrived” non-domiciled taxpayers in the period, while 9,000 people exited the category.
So, what was all the fuss about? Nothing at all, as it turned out.
And did the change in the rules lead to a mass exodus from the UK? No, not at all, as I have always suggested would be the case.
So, let's be clear: almost everything said about the wealthy and their willingness to flee from tax is total nonsense. Might we, therefore, politely ignore them in the future?
And might we also do something else? Might we also ignore those so-called professionals who appoint themselves to speak on their behalf and who are, at best, peddlers of fear and misinformation? It's time we saw them as such.
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Would it not be beneficial for the extremely wealthy to leave the country? Given that taxes are used to create fiscal space for governments to spend without exceeding productive capacity rather than for funding, then extremely rich people leaving also removes excess wealth but without the administrative burden of taxing it away.
Rich people tend to spend on stuff that is utterly useless, trinkets and emblems of wealth rather than essential items. If they left the country then market forces would re-orient productive capacity away from superficial purchases and towards more useful products. This seems like a good thing to me. But perhaps I am missing something obvious (as usual).
I think there is a good point here, but I would distinguish between wealth leaving and wealthy people leaving.
If a wealthy person leaves the UK, their accumulated sterling wealth does not disappear from the economy. They might sell their house, but someone else buys it. If they exchange sterling for another currency, someone acquires the sterling. So emigration is not equivalent to taxation. Tax actually cancels money and reduces private purchasing power; emigration does not necessarily do so.
Your stronger point is on resources. If very wealthy people leave, their demand for resources may leave with them. Fewer forms of conspicuous consumption could release labour, land and other resources for socially more useful purposes.
But that is not automatic. Markets do not necessarily redirect those resources towards social need. Someone has to create the demand for affordable housing, renewable energy, care, public transport and so on. Government can do that through spending, taxation, regulation and investment.
There is also a more fundamental point. I do not particularly want wealthy people to leave. I want them to stay and participate in society on the same reasonable terms as everyone else, including paying the tax that parliament decides is appropriate.
If some decide that they would rather leave than do so, I would not design tax policy around preventing them. The supposed threat of wealthy people leaving has been used for far too long to give them political privileges that the rest of us do not enjoy.
So, no, their departure would not substitute for taxing them. But nor do I think we should be frightened of it. A democratic society should decide its tax system according to what is good for society as a whole, not according to threats made by a very small number of extremely wealthy people.
My suspicion is that those who left were substantially wealthier than those who arrived. Given they were claiming non-dom status and so incentivised to keep non-UK income and gains outside the UK forever, whether that might be a good thing or a bad thing is left as an exercise for the reader.
But we do not know that.
The data does not identify ‘those who left’ (the country). It identifies those who ‘exited the category’. Was the category time limited – you can have non-dom status for 15 years or somesuch?
There are time limits, but the status can still be retained for non-tax purposes. I am not sure this would confuse the issue.
Little of the noise was made by non-doms, rather the ‘concierge classes’ whose personal interests are tied to serving the wealthy. The hit often felt hardest at the edged.
Thanks for this. Definitely worth highlighting.
And, as pointed out previously, if wealthy people do leave, unlikely as that is, they can only swap their wealth with someone coming in. For example, if they sell their house and other properties someone has to buy them to do this. If they sell sterling denominated shares someone has to buy them. If they exchange sterling for foreign currency someone has to buy it. Overall the total wealth in the UK does not decrease if a wealthy person leaves.
Moving into the hypothetical now, what would happen if lots of wealth people were to leave. It’s interesting to consider even though it’s vanishingly improbable. Well then, because there would be lots of sellers of British assets, and because there have to be corresponding buyers, the price of these assets would fall. And this is a good thing. It would reduce inequality, even if only marginally. And wealthy people would lose money (which is one reason why a massive exodus is unlikely). There is perhaps some evidence of this happening in the price reduction in the most expensive properties in London.
I think there is a good point here, but I would distinguish between wealth leaving and wealthy people leaving.
If a very wealthy person leaves the UK, their accumulated sterling wealth does not disappear from the economy. They might sell their house and other UK assets, but someone else buys them. If they exchange sterling for another currency, someone else acquires the sterling. So emigration is not equivalent to taxation.
Your stronger point is on resources. If very wealthy people leave, their demand for resources may leave with them. Fewer luxury houses, private jets, yachts, domestic servants and other forms of conspicuous consumption could release labour, land and other resources for socially more useful purposes.
But even that is not automatic. Markets do not necessarily redirect those resources towards social need. Someone has to create the demand for affordable housing, renewable energy, care, public transport and so on. Government can do that through spending, taxation, regulation and investment.
There is also a more fundamental point. I do not particularly want wealthy people to leave. I want them to stay and participate in society on the same reasonable terms as everyone else, including paying the tax that parliament decides is appropriate.
If some decide that they would rather leave than do so, I would not design tax policy around preventing them. The supposed threat of wealthy people leaving has been used for far too long to give them political privileges that the rest of us do not enjoy.
So, no, their departure would not substitute for taxing them. But nor do I think we should be frightened of it. A democratic society should decide its tax system according to what is good for society as a whole, not according to threats made by a very small number of extremely wealthy people.
“Some are born wealthy and influential, some achieve wealth and influence, and some use public relations people posing as journalists.” (From Daniel J. Borstin)
Will rich guys tax adviser, Dan Neidle, be interviewed about this?
I doubt it….
Relevant, and no so different here in some ways. Of Two Minds – While We Focused on Fripperies, the Foundations Have Rotted Away
Thanks
It’s frustrating that this is even a talking point any more. I’ve personally spoken with comfortably-0ff friends who declare that ‘many’ wealthy people they know are leaving because of changes like non-dom status. Just because they know of some people who are doing it (and likely quite vocally, as is often the case for privilege that feels it has been treated unfairly when asked to pay its share), doesn’t mean most are, and the stats suggest that even if a number are leaving just as many are happy to come.
If the net result is the misers leave and wealthy individuals who value British culture and society more replace them, then I think it’s fair to suggest that should be a net benefit to the country.
There was an interview about 2 years ago with the Elite researcher Michael Hartmann, where he stated that all the data he has searched through never confirmed the supposed fact of the rich leaving when taxing goes up.
I’d need to rewatch the 4 hour interview for precise detail again but I think he stated that’s because people, even when being rich and thus able to live anywhere they want, they still mostly grew up in a certain country and so developed an attachment to it.
They’re accustomed to its culture and know how live’s working which is not a given in another country even if they’d live in closed of environments.
And that’s another point:
They’d might need to live (even more) closed off whereas in the country they know they’re quite free to move.
Comparing living a still good life while having to pay more tax against having to live closed off in a country you don’t really understand doesn’t take very much thought.
I’d even argue that they’d be willing to give much much more than they think themselves able to if the fact, that they would live in an even better life in an equal society, would be brought through to them instead of the constant neoliberal propaganda of them needing to be rich for society to function properly.
I guess the biggest problem simply is that they don’t really understand wealth themselves correctly.
I’ve lived in the same house, same city for more than 50 years. Partly through my adult children, partly simply through longevity, i have a whole network of useful people who I trust. These range from doctors, physiotherapists, podiatrists, to hairdressers, electricians, plumbers, cleaners, solicitors . . and so on. Moving abroad would take considerable effort to replace this, but this network adds enormously to the ease and comfort of life. So expats get ripped off — I’ve found that most of them will moan about the locals who cheat them, or otherwise disappoint them.
Many rich people do not move for precisely that reason. Place matters more than money – especially when you can afford to do without it.
” If they sell their house then someone else will buy it” Only if they have the money. A £60 million pounds house on Park Lane is only worth that much if someone with £60 million wants to buy it. If the rich people become convinced that their UK assets are at risk they won’t. So that highly valuable place is now worthless. I have heard Gary Stevenson declare that the rich take Hertfordshire with them. No they can’t but they can make it valueless. This is the blind spot beloved of socialists. Where does the value in UK assets come from? If you want to convince rich people that any investment in the UK will be confiscated then do so but who will replace them?
You are right about one thing. A £60 million house is only worth £60 million if someone is prepared to pay that price for it. Asset prices are determined at the margin by transactions between buyers and sellers.
But suppose wealthy people leave and the Park Lane house can now only be sold for £20 million. What has actually happened? The house has not disappeared. Neither has the land. Its capacity to provide accommodation has not altered. What has disappeared is £40 million of its previously assumed market valuation.
Why should I regard that as a national economic disaster?
Indeed, one of Britain’s problems is that we have confused rising asset prices with the creation of real wealth. Making land and housing extraordinarily expensive does not make the country more productive. It does the opposite by extracting enormous rents from those who need somewhere to live and diverting capital into speculation.
The Hertfordshire example makes the same point. The rich cannot take Hertfordshire with them. The land, houses, infrastructure, businesses and people remain. Their market prices might change if the composition of demand changes, but their capacity to contribute to the economy does not disappear as a consequence.
And where has “confiscation” come from? Taxation enacted by a democratically elected parliament is not confiscation. Every investor knows that. Investment has never carried a guarantee that government will preserve an investor’s preferred asset valuation.
Nor do we need to find another billionaire to “replace” someone who leaves. That assumes that maintaining high valuations of existing assets is itself an economic objective. It isn’t.
What matters is the productive capacity of the UK: its people, skills, land, infrastructure, technology, institutions and natural resources. Those are the foundations of real economic value. The paper valuation placed upon a mansion in Park Lane is not.