Give it time. More taxes are coming.
That’s the uncomfortable truth hiding behind the government’s early victory lap over HMRC payroll data on non-dom departures.
Supporters of the abolition of the non-dom regime are holding up the lack of a mass exodus in the first 120 days of the tax year as proof the policy has landed without damage.
This is not proof — it’s premature spin based on an incomplete picture. Payroll data is a poor tool for measuring high-net-worth migration. It captures those with UK PAYE income, but many of the wealthiest non-doms do not take a salary or pension here.
They can vanish from the tax base without a trace in the monthly figures. Full clarity will only come with self-assessment data for the 2025–26 year — which won’t arrive until January 2027. By then, the real fiscal hit will already be locked in. Even if the number physically leaving the UK matches or undercuts forecasts, that tells us nothing about the more important shift: the movement of money.
The most sophisticated wealth holders do not have to move house to move capital. They can, and do, restructure their holdings well before they pack a bag, and the capital outflow has already begun.
Since the status was scrapped, significant sums have moved into offshore bonds. This is a straightforward, legal, and tax-efficient way to put assets outside the UK’s income and capital gains tax net.
Investors with £1m in investable assets — often less — can execute the switch with minimal cost and administration. Once in place, these structures allow clients to stop “earning” in taxable terms and instead take carefully managed withdrawals that remain below the thresholds.
Large amounts of liquid cash have also been redirected into gilts and overseas investments.
Gilts offer safety, yield, and sometimes inheritance tax benefits. Overseas assets remove returns entirely from HMRC’s reach. Both approaches reduce future UK tax receipts, but neither will ever appear in the “departure” numbers ministers are leaning on to claim success.
The uncomfortable truth is that removing the non-dom regime was always more about political optics than revenue. It gave the government a headline-grabbing symbol of fairness by claims of taxing “the rich” without raising rates on the wider electorate. However, expecting it to deliver the forecast billions was unrealistic. Wealth is mobile. Capital can slip quietly out of the domestic tax net without its owners ever leaving the country.
The danger in buying into this early narrative is complacency. If the Treasury convinces itself that the risk has passed, it will be unprepared when the projected revenues fail to appear. The gap will need to be filled, and when that moment comes, the tax net will tighten elsewhere, inevitably catching those less able to shelter or relocate their assets.
What is being celebrated now is not the avoidance of damage but the failure to measure it properly. The government is effectively saying: it could have been worse. That is a hollow benchmark for success. The visible departures — the relocations that make headlines — are only the surface layer.
The invisible re-engineering of portfolios is the deeper story, and its effects will be far more enduring. By the time the full data lands in 2027, much of the wealth that might have been taxed under the old regime will be permanently out of reach. In the meantime, the government will point to early numbers as vindication, ignoring the fact that the erosion of the tax base has already started.
Those celebrating now will be the same voices explaining in a few years why the non-dom abolition didn’t raise as much as promised, blaming global conditions rather than the quiet, predictable capital flight happening in plain sight.
Declaring victory at this stage is not just premature, it’s a fundamental misreading of how wealth behaves.
