‘I’m still going to leave’: Reeves’ non-dom concession is not enough for London’s super rich

Amid an exodus of the country’s millionaires and billionaires, the government is revisiting its reforms to the non-dom regime. But the recent changes floated by the Chancellor have been given short shrift by non-doms and their advisers. Ali Lyon explores what might actually stem the departures of the UK’s wealthy foreigners.

In the clandestine and closeted world of ultra-high net worth advisory, Leslie Macleod-Miller is a veritable misfit.

Rarely seen out of a garish suit, nor without his protruding strands white hair defying all laws of logic and gravity, the qualified lawyer and lobbyist is hard to pigeon-hole and even harder to forget.

That distinctiveness will have no doubt served him well in his latest role, as he tries to leave a lasting impression with Treasury officials in his efforts to make the government reconsider its reforms to the so-called non-dom regime.

Along with a group of family offices and tax advisors, Macleod-Miller helped establish ‘Foreign Investors for Britain’ (FIFB) – a lobby group to protect the interests of the UK’s ‘non-domiciled residents’ – half-way through last year.

The move was a noteworthy event in and of itself. Never before had the hitherto disparate and spectral collection of wealthy foreigners, known colloquially as non-doms, joined forces and broken cover. Even as – on two separate occasions – the previous Conservative administrations chose to alter the centuries-old regime, those affected kept any grievances private, and restricted lobbying efforts – such that they existed – to back channels alone.

But so great was the concern around Labour’s plans for the regime – originally established to attract rich foreign nationals with the promise not to tax their overseas assets and income – that the desire for reforms trumped the cohort’s usual proclivity for privacy.

“These people are not sitting on gilded thrones somewhere,” Macleod-Miller tells City AM , reeling off a set of talking points carefully honed over the seven months of FIFB’s existence. “These are people actively engaged in Britain. They’ve got children at the schools, and they contribute massively to the economy. But if you shove them onto a raft and send them away, they will take their wealth with them.”

But despite MacLeod-Miller’s appearance, and his organisation’s successful effort to make non-dom taxation something of a cause célèbre in recent months, FIFB’s efforts have largely been in vain.

Studies that didn’t move the needle

In September, the group published a headline-grabbing study predicting Labour’s non-dom policy – one of the party’s few genuine revenue raisers in its manifesto – would cost the Exchequer £1bn due to the exodus of non-doms that it would cause.

And two weeks out from Rachel Reeves’ maiden Budget, with rumours of crunch meetings with senior ministers and advisers swirling , FIFB made a last ditch appeal to the Chancellor. Along with more Oxford Economics research, it proposed the introduction of a ‘Tiered Tax Regime’ that would apply an annual levy of between £500,000 and £2m non-doms in place of her party’s plans to do away with the status.

Both the warnings and alternative proposal fell on deaf ears, and the government went ahead with its plans to scrap the regime that dates back to the Napoleonic Wars.

In the months that followed, the warnings of an exodus of the UK’s super rich continued apace. Research from global analytics firm New World Wealth published earlier this month found the UK lost a record 10,800 millionaires in 2024 . But with the Treasury intransigent, it looked as if for all FIFB’s intense campaigning, Macleod-Miller had lost the political debate.

That was, at least, until last week, when at a humdrum satellite event at the World Economic Forum in Davos, the Chancellor opened the door just a crack to the demands that FIFB had been making.

“We have been listening to the concerns that have been raised by the non-dom community,” she said in answer to a question from the Wall Street Journal’s Emma Tucker. “And in the Finance Bill, we will be tabling an amendment which makes more generous the temporary repatriation facility (TRF, one of the schemes being introduced to replace the non-dom regime), which enables non-doms to bring money into the UK without paying significant taxes.”

Treasury reforms ‘not where they need to be’

But while her acknowledgement of non-doms’ grievances was widely welcomed, the detail of what she then promised has since been roundly chastised by the community to whom Reeves claimed to have been listening.

“They are still not where they need to be,” Macleod-Miller says, a day on from the Chancellor’s interview. “It’s a bit like throwing a blanket to the people on the Titanic, or playing the music more loudly. What they need to do is turn the ship around.”

James Quarmby, the head of private wealth at Stephenson Harwood, shares Macleod-Miller’s assessment that while the shift in mood music is gladly received, what is actually being proposed falls well wide of the mark. The Chancellor’s comments were sufficient – he says – to warrant “perhaps a modest glass of wine, but not enough to justify opening a bottle of champagne”.

The changes to the TRF promised by Reeves would allow people who previously claimed non-dom status more time to bring money into the UK at a more generous tax rate.

And even those who spearheaded the drive to reform the outgoing non-dom regime are unconvinced the TRF reforms would move the needle. Arun Advani, an economist whose research is widely attributed as laying the academic foundations for the reforms announced in the Autumn, says the government “aren’t actually doing much”.

“It’s very hard to see how the proposed changes would work,” Dominic Lawrance, a partner in Charles Russell Speechly’s private client division who helped devise FIFB’s tiered tax proposal. “By definition it has no use to someone who has not previously been a remittance user [a category of the outgoing non-dom regime]. And it has no use to someone who has previously been a remittance user, but decided that the ongoing tax cost of being resident in the UK is too high and they’re therefore leaving. Because in those circumstances, you wouldn’t be bringing anything into the UK in the first place.”

One such user of the old regime is Magda Wierzycka, a Polish-born South African non-dom, who moved to the UK in 2017 fleeing political persecution in South Africa.

She first spoke to City AM in the immediate aftermath of the Budget, pledging to “fight tooth and nail” against the changes announced by the Chancellor. But three months on, she and her family are more resigned to their fate, and she is making preparations for a departure.

“My husband… was hoping to become tax resident in the UK with me,” she says over a video call from South Africa. “That’s not happening anymore, and it would have made me a permanent resident in the UK.”

Branding changes announced this week as “nothing”, she takes a similar view to the one floated by by Speechly’s Lawrance, asking plainly: “Why would I put any more money into the UK? Money which has already been taxed in South Africa, in order for it to be taxed some more, if I’m still going to leave?”

Some tax advisers – including Stephen Kenny of accountancy firm PKF Littlejohn – believe that any changes Reeves’ plans would be too little too late, with many non-doms already having left. Or, as Kenny puts it, we would be “shutting the garden gate after the dog’s already escaped”.

But for Wierzycka, who is South Africa’s richest woman, there is one way in which the government could keep her and her venture capital firm Braavos in the UK; not to mention coax her husband across, too.

In the absence of any realistic chance that FIFB’s TTR will be adopted, the billionaire wants to see a change in the treatment of already-existing trusts. Under the outgoing rules, non-doms could put foreign-held assets and income into a trust that would be free from UK tax. But with the new ones, that protection will cease; meaning the trust would be taxed by the UK as any other would – even if the income and assets it contains have been taxed already in – in Wierzycka’s case – South Africa.

“If those trusts that non-doms were encouraged to set up when we moved here were grandfathered [meaning immune from the upcoming changes] then I would stay,” she says.

But if those rules don’t change, then Wierzycka has decided to return to South Africa. After a chastening election for the ruling African National Congress, the country is enjoying a more stable political environment; one which, she says, combined with the upcoming non-dom reforms, has tempted so many South Africans back that there is now a years-long backlog in the country’s revenue services.

It is this change – and another that will see inheritance tax to non-doms’ offshore assets applied up to 10 years after they have left the UK – that advisors like Quarmby and Lawrance say are driving the attrition of people like Wierzycka.

It will not be long before serial entrepreneur Wierzycka learns of her fate. The Finance Bill will go through its public bill committee stage this week, representing one of the last chances for any amendments to be tabled and considered.

For its part, FIFB says it is in regular dialogue with Keir Starmer’s business adviser, Varun Chandra, who the body claims has committed “personally to help lead on the continuing dialogue with ultra-high net worth investors”.

The group is also arranging a meeting with Number 10 special advisers and Treasury officials, to which they plan bring a group of non-doms to make an emotional case in person.

If the likes of Wierzycka are to stay in the UK, then the lobby group will quickly need to secure tangible movement on what Macleod-Miller – sitting in front of a mirrored wall, white hair still impossibly on end – refers to as his two “red lines”.

But, as the UK endures a week-long battering of rain and winds from Storm Eowyn, from her office in Cape Town, Wierzycka raises another factor that is playing on her mind; one that even the Chancellor of a government with a 156-seat majority cannot cannot control.

“I look out of the window, and at the weather here, and think, ‘Why would I stay in the UK?”‘