Rachel Reeves’s flagship plan to overhaul the UK’s non-dom tax regime is facing an early blow after new analysis suggested far more wealthy residents have left the country than the Treasury forecast.
According to consultancy Chamberlain Walker, around 1,800 non-domiciled individuals — 50 per cent more than expected — have exited Britain since the chancellor scrapped the system in April 2025.
The analysis raises questions over whether the policy, designed to bring in £34 billion over five years, will deliver the expected boost to the public finances.
Non-domiciled residents — or non-doms — are people who live in the UK but claim their permanent home is abroad. Under the old system, they could avoid paying UK tax on overseas income and wealth by paying a fixed annual charge.
Reeves replaced that system in April with a new regime that she said would make taxation “fairer” and ensure “those who make their lives in Britain pay their fair share”.
But Chris Walker, founding partner of Chamberlain Walker and a former Treasury and DWP economist, said official data understates the true scale of departures.
“The Treasury is effectively flying blind about the behaviour of the most responsive group of non-doms,” he said. “The wealthiest are investors rather than salaried workers, so they do not always appear in HMRC’s datasets. The tax-revenue implications of their departures are significant.”
Walker’s analysis suggests many of those leaving are among the UK’s highest-earning residents — individuals who typically contribute tens of millions annually in income and capital gains tax.
The Treasury dismissed the figures, saying they were “based on anecdotal evidence we don’t recognise.”
A spokesperson said: “If you make your home in Britain, you should pay your taxes here. That is why we abolished the non-dom tax status — to invest in our public services, including the NHS.”
Despite the official line, the consultancy’s findings have fuelled fears among business groups that a growing number of high-net-worth individuals are moving assets — and tax residency — abroad to avoid the tighter regime.
The UK’s non-dom population peaked at nearly 80,000 in the mid-2010s but has been steadily declining since a series of reforms under George Osborne and Rishi Sunak.
The latest exodus coincides with reports from luxury brands and wealth managers that affluent clients are leaving Britain.
Last week, Ferrari’s chief executive told the Financial Times the company had “limited supplies of cars to the UK” amid concern that “some people are getting out for tax reasons.”
Private wealth advisers in London have reported a surge in relocation inquiries to Dubai, Milan, Monaco, and Singapore since the spring.
Critics of the reforms warn that the Treasury risks losing more revenue than it gains if large numbers of wealthy residents relocate.
Reeves has dismissed warnings of an exodus, telling The Guardian last week: “This is a brilliant country and people want to live here.”
Supporters of the reform argue that abolishing the preferential non-dom system was long overdue and that fears of mass departures are overstated.
However, economists say even small changes in high-earner residency can dent the exchequer’s returns. The top 1 per cent of earners account for nearly 30 per cent of UK income-tax receipts, meaning any shift in domicile can have outsized effects on revenue.
The controversy lands as the chancellor faces mounting fiscal pressure ahead of the 26 November budget, where she must find up to £30 billion in savings and tax rises to meet her fiscal rules.
If the number of non-doms leaving continues to rise, Reeves may struggle to deliver the revenue she has promised from her “fair tax” agenda — and could face fresh questions over whether the reform has cost the Treasury money rather than raised it.
