To Fly or Not to Fly – Changes to the UK Tax Regime

Like weather systems, rising taxes tend to shift capital elsewhere. And true to form, recent changes to the UK tax regime mean thousands of millionaires could be preparing to leave the country this year.

In this short piece, we look at what’s driving the exodus, where people are going, and what you might want to weigh up when considering your own location and long-term financial strategy.

The Early Signs Are In

Tax policy often spooks high earners, and when it does, they tend to move.

From Sean Connery and David Bowie to Stelios Haji-Ioannou, history shows that many high-profile individuals have relocated to manage their affairs more efficiently. Stelios, founder of EasyJet, is one example of a non-dom: someone living in the UK whose permanent home, for tax purposes, is elsewhere.

New research suggests they may soon have company. Up to 16,500 millionaires are expected to leave the UK in 2025 alone, that’s more than 10% of all projected global millionaire migration.

Top destinations? Switzerland, Italy, Portugal, Greece, and Monaco, which remains a favourite for ultra-high-net-worth individuals.

While it’s tempting to blame Labour governments for capital flight, it’s not a strictly party-political issue.

During World War II, the top rate of income tax hit 99.25%. Since then, it has gradually fallen, Conservative governments included. In the 1980s, the top rate dropped from 83% to 60%, yet even that wasn’t enough to stop Connery or Bowie heading for the exit. Today, the top rate sits at 45%.

Tax and Upend

The reality is simple: the government is trying to plug a massive hole in the UK’s finances. And just about every revenue lever is being tested.

Income tax makes up around 28% of government revenue. National Insurance contributes 18%, and capital taxes – inheritance tax (IHT), capital gains tax (CGT), and stamp duty account for 10%.

So, it’s no surprise that these latter areas are under review.

We’ve already seen the pension Lifetime Allowance scrapped, only for pensions to become subject to inheritance tax. CGT thresholds have been cut. And an extra 5% stamp duty now applies to certain residential purchases. National Insurance has also been subject to shifts in both rates and thresholds.

And Has it Helped?

Not significantly. According to the Office for Budget Responsibility, the UK now has “the sixth-highest debt, fifth-highest deficit, and third-highest borrowing costs among 36 advanced economies.”

Given the state of global affairs and the urgent need to reinvest in defence and public services, it’s hard to imagine any government solving this overnight. Even the estimated £2 billion in annual IHT revenue from pensions is little more than a drop in the ocean.

In other words: don’t expect much to change anytime soon.

What are Your Options?

Moving to sunnier climates with lower tax rates might seem appealing.

But HMRC has made changes here too.

As of 6 April 2025, the UK will end 200 years of favourable non-dom treatment. The old regime offered significant benefits: non-taxation of foreign income and gains, and in some cases, protection from IHT.

The new approach is residence-based. Individuals who’ve been non-UK resident for 10+ years may qualify for a temporary grace period, four years in which foreign income and gains brought into the UK won’t be taxed. After that, they’ll be taxed like everyone else.

Should You Stay or Should You Go?

There’s no one-size-fits-all answer.

For some, the benefits of relocating will outweigh the effort and disruption. For others, staying put while using smart structures and evidence-based investing strategies may offer more value over time.

There are also practicalities to weigh up. Yes, Monaco might offer tax advantages, but what will your wealth manager there charge in fees? What does your day-to-day lifestyle look like? And how do those choices align with your goals?

At First Wealth, we work with clients to find clarity in these decisions, balancing tax efficiency with long-term planning, lifestyle, and legacy.

If you’re thinking about your next move, we’d love to help. You can reach us on hello@firstwealth.co.uk or 020 7467 2700.

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.