A significant number of wealthy individuals are preparing to leave the UK before April 2025 in response to changes to non-domiciled (non-dom) tax rules introduced in the recent Budget. The reforms, which abolish the long-standing non-dom system, have created a surge in plans to relocate to destinations like Monaco.
The new rules will impose UK inheritance tax (IHT) on global assets after a three-to-10-year period for departing non-doms, depending on their length of UK residency. However, those leaving in the current tax year will face a reduced three-year IHT exposure, making early departure a priority for many, particularly older residents.
Under the existing system, non-doms could avoid IHT on foreign assets by leaving the UK before surpassing 15 years of residency. From April 2025, the new system will levy IHT on UK assets for up to 10 years of residence and expand to include global holdings after that period.
The Labour government estimates the reforms will raise 33 billion pounds in additional revenue, though experts have questioned these projections, citing the potential for accelerated departures to reduce taxable income. Meanwhile, the Office for Budget Responsibility has flagged the revenue forecasts as uncertain.
The changes have already prompted a wave of exits, with some advisers warning of knock-on effects for the UK economy as high-net-worth individuals relocate to destinations with warmer weather, such as Monaco and Dubai. The deadline for the three-year IHT exemption adds further urgency to these decisions, with many non-doms finalising plans to leave by the end of the current tax year.
