Give It Time – The Invisible Tax Escape Artists
For anyone who followed the government’s twinkle‑eyed celebration of wiping the non‑dom regime from the script, the headline “no trouble, no gains” feels a lot like a marketing gaffe. The short‑term numbers are solid, but the real fiscal consequences are gearing up behind the scenes. It’s not a win; it’s a train collapse with a silver lining.
Why the Early Numbers Are a Mirage
People cheering for the abolition point to the lack of a mass exodus in the first 120 days of the tax year as proof that the policy has hit the sweet spot. That’s a pre‑emptive spin based on incomplete data. Payroll data only shows those with UK PAYE income – and many high‑net‑worth non‑doms never even take a salary or pension here. They can erase themselves from tax files without leaving a paper trail in the monthly reports.
Full clarity will come in January 2027 with the self‑assessment data for the 2025‑26 year. By then, the real fiscal hit will already be locked in. Even if the numbers of people actually leaving match or fall short of forecasts, that tells us nothing about the bigger picture: the movement of money.
Capital Doesn’t Need a Suitcase
- High‑net‑worth individuals can re‑structure their holdings without moving house.
- They’ve already started moving a sizable chunk of capital into offshore bonds – a perfectly legal, tax‑efficient way to keep assets out of the UK’s income and capital gains tax net.
- Those with just £1m in investable assets (often less) can swap with minimal cost and bureaucratic hassle.
- Clients can stop “earning” in taxable terms and instead opt for managed withdrawals that stay below thresholds.
Besides, large sums of liquid cash have been redirected into gilts and overseas assets. This:
- provides safety, yield, and sometimes inheritance tax benefits;
- removes returns entirely from HMRC’s reach.
Neither of these strategies will ever appear in the “departure” numbers ministers rely on to claim success.
Political Optics, Not Revenue Reality
Removing the non‑dom regime was as much a symbol of fairness – claims of taxing the rich without raising rates on the wider electorate – as it was about revenue. Wanting to deliver forecast billions from it was simply unrealistic. Wealth is mobile, capital can slip quietly out of the domestic tax net without its owners ever leaving the country.
The Perils of Complacency
When the Treasury assumes the risk has passed it will be caught off‑guard when projected revenues fail to materialise. The shortfall will be absorbed elsewhere, tightening the tax net and inevitably catching anyone who can’t find a safe harbor.
What We’re Celebrating: Failure to Measure, Not Success
The public narrative is that the government managed not to cause damage. In reality, they’ve failed to measure the damage properly. A “could have been worse” benchmark is hollow, so what we’re truly seeing is the visible departures – relocations that make headlines – being only the surface layer.
The invisible re‑engineering of portfolios will have far more enduring consequences. By 2027 the bulk of wealth that might have been taxed under the old regime will be permanently out of reach.
Meanwhile, the government will point to early numbers as vindication, entirely ignoring the erosion of its tax base that has already begun. Those who boast now will later explain why the abolition didn’t raise as much as promised, citing global conditions rather than the quiet, predictable capital flight in plain sight.
Final Word
Declaring victory now is not just premature, it’s a fundamental misunderstanding of how wealth behaves. The real story is still unfolding – and the full damage will become crystal clear only when the delayed data arrives in 2027.
