UK tax reform to reduce income due to changes for wealthy foreigners — CEBR

The UK-based Centre for Economics and Business Research (CEBR) has analyzed the consequences of the abolition of the non-domicile (non-dom) tax status in the country. This reform, introduced last year, eliminated the special tax regime previously available to wealthy foreign nationals residing there, which had allowed them to avoid paying British taxes on their overseas income. According to CEBR experts, the departure of one-quarter of participants in the non-dom scheme would result in the cost to the government outweighing the revenue generated from the policy.

The study estimates that if one-third of these wealthy individuals leave the UK, the Treasury could lose around 700 million pounds ($931 million) annually. Meanwhile, the UK Treasury cites a forecast from the independent Office for Budget Responsibility, projecting an additional 33.8 billion pounds  ($44.95 billion) in tax revenues over the five-year period following implementation of the reform.

Competition for affluent individuals is intensifying as other countries offer increasingly attractive tax incentives. For instance, Italy provides a flat tax on foreign income, while the United Arab Emirates imposes no personal income tax at all. Several prominent investors, including executives from Goldman Sachs, have already announced plans to relocate outside the UK.