BusinessLDN, a lobby group representing London businesses, has urged the government to create an Office for Tax Competitiveness to identify where the UK loses out on attracting investment and growth due to stricter tax rules, according to the group's report. The report also calls for overturning tax changes including the abolition of the non-dom regime, which allowed wealthy foreign residents to avoid UK tax on overseas income. BusinessLDN stated that the change has been damaging to multiple sectors, from loss of talent in professional and financial services to the creative industries, where reforms have resulted in the loss of high-net-worth donors.
The exodus of non-doms has been a subject of debate, with conflicting estimates on the scale. A report suggested that nearly 2,000 wealthy non-doms fled the UK last year, while the Office for Budget Responsibility projects that as many as 20% of affected non-doms might leave, roughly 1,200 people. The discrepancy highlights uncertainty about the actual exodus, which affects policy decisions on tax competitiveness. A study from the Centre for Economics and Business Research found that the October 2024 announcement prompted a flurry of wealthy individuals to relocate. The Wealth Report by Knight Frank names Rachel Reeves' abolition of non-dom tax status as a key reason for shrinking demand for London property among wealthy individuals. Average house prices in Kensington have fallen by around 10% since 2024, reflecting the impact on the luxury property market.
This change has been damaging to multiple sectors, from loss of talent in the professional and financial services sectors, to the creative industries, where the reforms have resulted in the loss of high-net-worth donors.
Chancellor Rachel Reeves replaced the non-dom regime with a residence-based system taxing worldwide income, with a four-year grace period. However, ministers are reportedly in talks with City leaders on extending the grace period and introducing a 'pay-to-play' visa for the ultrarich, according to unnamed sources. The government is considering easing the rules amid concerns about the economic impact, but no final decisions have been made.
Global wealth trends show the UK lagging behind in attracting high net worth individuals. According to Knight Frank, the global population of ultra-high net worth individuals (assets over $30m) surged from 551,435 to 713,626 in five years. The number of billionaires increased from 2,723 to 3,110 in five years and could rise to nearly 4,000 by 2031. The US has the largest share of high net-worth individuals at 251,135 in 2026, followed by China (121,677) and Germany (38,215). Indonesia is expected to see the fastest growth, increasing by 82% by 2031. In contrast, the UK is forecast to see the fifth lowest growth in high net worth individuals to 2031, rising from 27,876 to 30,942. The UK's growth was only 12% from 2021 to 2026. Liam Bailey, head of research at Knight Frank, said: "We are witnessing one of the most significant shifts in global wealth distribution in modern history." Rory Penn, chair of the private office business at Knight Frank, added: "The ultra-wealthy are becoming markedly more mobile, yet the list of markets where they feel genuinely comfortable investing or basing their families has narrowed."
We are witnessing one of the most significant shifts in global wealth distribution in modern history.
On housebuilding, BusinessLDN is calling on Labour to delay a new safety levy and streamline regulatory red tape to accelerate construction. The Treasury watchdog warned that only 220,000 new homes will be built in the next financial year, falling short of the government's target. The group argues that regulatory reforms are needed to boost supply and address the housing crisis.
The ultra-wealthy are becoming markedly more mobile, yet the list of markets where they feel genuinely comfortable investing or basing their families has narrowed.