Rachel Reeves nightmare as ‘wealthy workers abandon UK’ over tax hikes | Personal Finance | Finance

Concerns are mounting over the UK’s changing tax landscape as some of the country’s top earners weigh up leaving the UK. Legal experts have warned the trend may extend well beyond the non-domiciled community.

Following Chancellor Rachel Reeves’ decision to scrap tax benefits for non-doms, fresh concerns are emerging that broader segments of the wealthy population could soon follow suit. City AM recently reported that the head of Goldman Sachs International had chosen to relocate to Milan. Now, tax lawyers say the conversation is expanding to include UK-based high earners who don’t fall under non-dom status. Michael Anderson, a partner at law firm Joseph Hage Aaronson and Bremen (JHAB), told City AM: “I act for some clients that are not non-doms and are leaving the UK.”

He added that the sentiment is far from isolated and hinted that a wider exodus may already be under way. He said: “I would be very surprised if many high-earning bankers had not considered leaving the UK, even for a year or two, to save on tax.”

The warnings come amid projections that the Government’s policy shift on non-doms could lead to a loss of up to £12.2 billion in Treasury revenue by 2030.

Despite the current tax year having already started, Mr Anderson noted that he has received an “unprecedented” number of inquiries from individuals asking if they can still move offshore this year.

Mr Anderson clarified that most of the activity centres on those seeking non-resident status, warning that the tax authority is likely to pay close attention to how these moves are carried out. He anticipates particular scrutiny of whether individuals are truly meeting the requirements set out in the statutory residence test.

The rules include strict limits on time spent in the UK and detailed conditions for working abroad – thresholds that can be difficult to monitor, especially for those with complex professional schedules.

Mr Anderson believes HMRC will likely concentrate on the accuracy of record-keeping for people claiming to work full-time overseas. He cautioned that anyone relocating for tax purposes should be ready to provide detailed documentation of their working hours and travel history.

Non-dom status allows UK residents to avoid paying tax on overseas income by claiming their permanent home for tax purposes is abroad.

Labour pledged to scrap the regime in its election manifesto, arguing it would tackle inequality in the tax system and generate additional revenue for public services. However, following a backlash, Ms Reeves announced a more gradual phase-out of the tax benefits.

She did this by tweaking the Temporary Repatriation Facility — a three-year scheme designed to encourage former non-doms to bring overseas assets to the UK at a discounted tax rate.

Downing Street confirmed the adjustments would not alter the Government’s broader goal of replacing the “outdated non-dom tax regime”.

The prime minister’s official spokesman said the revised system “addresses unfairness in our tax system, attracts the best talent and investment to the UK, and ensures that everyone who is a long-term resident of the UK pays their tax here”.