Without non-doms, who will pay for Labour’s bloated state?

We are not the fastest growing economy in the G7, even though the Labour party promised that we would be. We are not topping any tables for inward investment, and we have fallen to the bottom of the league for new companies listed on the stock market. Still, it is good to know that there is still one measure where the UK economy comfortably beats the rest of the world. We are now losing more millionaires than any rival nation. The exodus of wealth out of the UK, it appears, is accelerating – and very soon this is going to turn into a big problem for the Chancellor Rachel Reeves. 

The UK was already one of the countries that the wealthy were fleeing. But according to a report out today by the advisers Henley & Partners, a record 16,500 millionaires will leave the UK in 2025. This is double the number fleeing China, which comes in at number two on the rankings and which is expected to lose 7,800 this year. It is the first time the UK has topped the annual table, and its lead over the rest of the world is not only huge, it is also accelerating. It is now official. The rich are getting out of Britain in increasing numbers. 

It is not hard to understand why. The ending of non-dom status has driven many of the wealthy foreigners out of the country. The decision to impose inheritance tax at 40 per cent, one of the highest rates in the world, on their global assets was unsurprisingly a major factor in persuading them to leave.

The price of remaining in the UK is now punitively high if you are not British. But it goes beyond that. The UK has developed a very unappealing tax system, with high rates of income tax, a rising rate of corporation tax, increasing rates of Capital Gains Tax, especially for entrepreneurs, along with higher dividend taxes, frozen thresholds, and very high rates of stamp duty and VAT. It is not just the non-doms heading for Dubai and elsewhere. It is the well-off British as well. 

Of course, the left will celebrate that, and the Starmer government certainly has no time for the millionaires expected to leave this year. But here is the catch. The UK is also uniquely dependent on a small number of well-off people to support its bloated, free-spending state.

The top 1 per cent of taxpayers pay 29 per cent of all the revenue from income tax, while the top 10 per cent pay 60 per cent of the total. Other countries take more out of the economy in tax overall, but they squeeze the money out of a broader range of people. The UK relies on a handful of people – many of whom are now leaving.

The risk for Reeves is that the exodus now develops a momentum of its own. If that happens, the UK’s already precarious public finances will be in even worse shape than they already are – and she will have only herself to blame.