Preliminary payroll figures suggest departures are tracking official forecasts — easing pressure on Chancellor Rachel Reeves after dire survey warnings

The long‑mooted flight of Britain’s “non‑doms” has not come to pass—at least not yet. Early analysis of HM Revenue & Customs payroll records indicates the number of wealthy residents leaving the UK since sweeping reforms took effect in April is broadly in line with what officials expected, and may even be running a touch lower. For Chancellor Rachel Reeves, who has faced weeks of headlines about a millionaire exodus, the initial reads are a political and fiscal reprieve.

People briefed on a recent HMRC review say the monthly data—imperfect, but the best near‑real‑time proxy for movements in the high‑earner population—shows departures by non‑doms tracking assumptions used by the Office for Budget Responsibility (OBR) when it costed the reforms. Those assumptions envisaged a sharper fall among individuals with trusts, and a more modest decline among those without, reflecting the different tax exposures under the new regime.

What changed—and when

The government abolished the century‑old remittance‑basis system from 6 April 2025 and replaced it with a residence‑based framework. At its core is a four‑year Foreign Income and Gains (FIG) regime for new arrivals who have been non‑resident for ten consecutive tax years: qualifying individuals can earn and remit overseas income and gains tax‑free during their first four years in the UK. For long‑term residents who had relied on the old rules, transitional measures apply in 2025–26—such as taxing only 50 per cent of foreign income that year—but protections for future income and gains inside many offshore trusts have been curtailed.

The switch, trailed by the Treasury last year and confirmed in the Spring Budget, was pitched as a modernisation that would make the system fairer without shutting the door to internationally mobile talent. Yet it spurred a wave of surveys and anecdotal reporting that suggested large numbers of wealthy individuals were preparing to relocate to Rome, Dubai, Zurich or Singapore.

The data, so far

The early payroll signals do not bear out those worst‑case narratives. According to people familiar with HMRC’s analysis, the flow of non‑dom leavers appears consistent with the OBR’s modelling for the current fiscal year—roughly a one‑eighth fall in the population of non‑doms without trusts and a one‑quarter fall among those with trusts and deemed domiciles. That is meaningful attrition, but far from a stampede. It is also a national‑level picture; the pattern may differ in London’s wealthiest postcodes.

Crucially, officials and tax practitioners caution that definitive numbers will take time. Self‑assessment returns for 2025–26 are not due until January 2027, and the government’s own statistical series on non‑doms—which still reflects the pre‑reform population in the 2023–24 tax year—will not fully capture the post‑April shifts until next year’s release. Until then, internal administrative data (PAYE, National Insurance and other indicators) will do most of the heavy lifting in tracking behavioural change.

Politics and perception

For Reeves, whose first months in office have been dominated by questions over growth, productivity and the public finances, the optics matter. The Treasury has banked several billion pounds of additional annual revenue from ending the remittance basis and tightening the interaction of trusts with income, capital gains and inheritance taxes. An early impression that the wealthy were departing en masse risked spooking investors and undermining those revenue lines before they arrived.

The latest signals will not end the debate, but they allow ministers to argue that Britain remains an attractive base—particularly for genuinely new arrivals who benefit from the four‑year FIG window and from the retention of Overseas Workday Relief. The government has also left the door ajar to technical adjustments as evidence accumulates, but advisers say a wholesale U‑turn now looks less likely than it did when exodus headlines were at their peak in early summer.

What advisers and clients are doing

Private banks and law firms report brisk activity, but much of it is defensive restructuring rather than one‑way emigration. Clients are revisiting trust arrangements, crystallising gains, or bringing historic offshore income into the UK under the temporary repatriation facility that offers a discounted rate for remitting pre‑April 2025 income and gains. Some long‑term residents are indeed moving—typically those with the most complex offshore structures, or families for whom the loss of trust protections has swung the calculus—but others are taking a wait‑and‑see approach while they test the competitiveness of the new rules in practice.

There are also non‑tax considerations. Post‑pandemic schooling, proximity to European markets, cultural amenities and the depth of professional services still weigh heavily in the UK’s favour. Real‑estate agents in prime central London, who had braced for a glut of high‑end listings, say supply has increased but bidding activity has held up better than feared, helped by a broader recovery in sterling assets.

The revenue question

Whether the reforms raise the money the OBR pencilled in will depend on three moving parts: how many people leave; how those who stay restructure; and how much foreign income is voluntarily remitted under the new facility. The watchdog’s January supplementary note modelled a 12 per cent fall in the non‑dom population without trusts and a 25 per cent fall among those with trusts, alongside behavioural offsets such as greater use of allowances and changes in holding structures. If departures undershoot those assumptions, the revenue line improves; if remittances exceed expectations, it improves further.

On the other hand, critics point out downside risks: highly mobile financiers relocating in small but fiscally significant numbers; lower‑than‑expected repatriations if clients prefer to sit tight; and potential knock‑ons to investment and philanthropy that are not fully captured in tax receipts. The government, for its part, insists it has struck a pragmatic balance between fairness and competitiveness.

International context

Britain is not moving in isolation. Competing hubs from Italy to Greece have adopted targeted regimes for new residents, often combining time‑limited exemptions with clear exit ramps. The UK’s four‑year FIG window is shorter than some continental alternatives but is more generous than the pre‑2017 UK approach in at least one respect: it explicitly allows duty‑free remittance of qualifying foreign income and gains in the window, removing an administrative deterrent for newcomers.

For relocators comparing offers, headline tax rates are only part of the calculation. Rule stability, market access, family life and the administrative burden matter at least as much. By that yardstick, the absence of an early‑stage stampede may say less about marginal tax rates than about the enduring pull of the UK’s ecosystem.

What to watch next

Three milestones will shape the story from here. First, the autumn policy update: HM Treasury has hinted it could refine inheritance‑tax interactions and the treatment of some long‑standing trust structures, though any changes are likely to be technical. Second, the first full quarter of post‑April tax receipts, which will offer a clearer view of remittances under the temporary facility. Third, the property and labour‑market data through winter: staff moves announced in summer often materialise only at year‑end.

If, by early 2026, the data still show departures running close to official forecasts, today’s anxiety about a wealth exodus will look like a classic case of survey noise outrunning statistics. If not, the debate will return with force. Either way, the episode underlines a recurring theme of British fiscal politics: big, symbolic changes often move fewer people than the headlines suggest—and what matters most is how policy is executed in the months that follow.

Sources

Financial Times reporting on HMRC’s initial payroll analysis; Office for Budget Responsibility, supplementary note on reforms to the non‑domicile regime (January 2025); HM Treasury and HMRC technical and policy summaries of the four‑year FIG regime and related transitional rules; contemporaneous reporting from major UK outlets on the debate over an alleged exodus and potential policy refinements.