Bring Them Back
Britain has been losing its wealthy people. Not in trickles, but in a steady exodus that has picked up speed with each Budget. They have gone to Italy, to Switzerland, to Dubai, to Monaco. They have taken their spending, their investment, and their tax contributions with them. This matters more than the debate usually admits, because a small number of high earners fund a disproportionate share of public services. When they leave, the rest of us pick up the bill.
The instinct in some quarters is to shrug. Good riddance, they say, to people who could afford to leave. But the arithmetic is unforgiving. The top one percent of taxpayers contribute close to a third of income tax revenue. Losing a few thousand of them does not free up resources for everyone else. It removes resources that everyone else was relying on.
The causes of the exodus are not mysterious. Three changes did the damage. The abolition of non-dom status ended a regime that let long-term residents keep foreign income and gains outside UK tax, provided they did not bring it into the country. Its replacement taxes worldwide income after four years, with no transition for wealth already built up abroad.
Inheritance tax was extended to worldwide assets after ten years of residence, threatening not current income but accumulated family fortune, which is a different order of provocation. And capital gains tax was pushed closer to income tax rates, at exactly the moment when founders and investors were deciding where to realize their gains.
Each change was put forward for different reasons. Together, they told a mobile population that Britain no longer wanted to be where they kept their money. Mobile populations listen to that kind of message and act on it.
So what do we do? We reverse what drove them out, and we make the reversal credible. A revived non-dom regime, structured as a flat annual charge in exchange for leaving foreign income untaxed while it stays foreign, would put Britain back in the same competitive position as Italy and Switzerland, both of which have been the chief beneficiaries of our loss.
Inheritance tax on worldwide assets should return to a domicile test, or at minimum offer a long transition and a cap, because it is the single change most responsible for people leaving rather than merely visiting less. Capital gains tax should come down, particularly for business assets and long-held investments, since this is the lever that matters most to exactly the people we want to keep.
None of this works without certainty. People who left did not do so only because of what had already changed. They left because they feared what might change next. A government that wants them back needs to commit, publicly and for several years, to not moving the goalposts again. Ideally this commitment would be cross-party, so that a change of government does not simply reopen the question.
There is also an entry problem, separate from the exit problem. The Tier 1 Investor visa was scrapped in 2022, closing off a route that other countries have kept open and improved. A new investment-linked visa, with a lower threshold than the old two million pounds and a quicker path to settlement for those investing in research or business, would bring in new wealth alongside the returning old.
Finally, there is the matter of tone. Governments communicate through more than legislation. Rhetoric about the wealthy not paying their fair share, however popular with some audiences, tells a mobile population what it can expect if it stays. If ministers want people to come back, they might start by sounding as though they mean it.
Some of those who left cite the British weather, Brexit or lifestyle reasons rather than tax alone. And competing for a mobile wealthy class risks unpopularity among the general public.
But the trade-off already made has a visible cost, in departures we can count and revenue we can measure falling short of forecast. A country that wants its wealthy citizens to stay, or to return, needs to change the incentives that sent them away, and needs to convince them the change will last. Anything less is asking them to bet on our word, when the recent record gives them little reason to take the bet.
Madsen Pirie