UK’s non-dom shake-up to attract high earners to Gulf

UK Parliament/Maria Unge/Reuters

• Influx of foreign nationals expected
• Non-doms may return to avoid tax
• UAE is popular alternative for HNWs

There is likely to be an influx of expats and returning nationals to the Gulf as a result of the UK’s abolition of non-domicile tax status from April 2025, experts told AGBI.

‘Non-doms’ live in the UK but claim to have a permanent residence in another country, so they do not pay tax on overseas earnings.

Last week UK chancellor Jeremy Hunt announced plans to scrap the 200-year-old regime and make new arrivals pay the same amount of tax as other citizens after an initial four years.   

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The move will prompt Gulf nationals – and other wealthy individuals – residing in the UK to consider moving elsewhere or back to the region, experts said, citing the UAE as one option. 

“Already, the UAE is one of the top expat destinations for UK residents, due to its political stability, international connectivity, favourable visa and tax policies and higher quality of life,” said Tony Smith, head of tax at wealth advisory firm St James’s Place Asia & Middle East.

“The changes may see more UK expats rethink their long-term plans and base themselves permanently in the UAE.” 

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Hunt’s proposals are a “significant change in the UK tax landscape”, with financial implications both for UK national non-doms living in the Gulf and Gulf national non-doms in the UK, according to Smith. 

“The UK’s non-dom regime has been an attractive draw for high-earners from the Gulf, many of which are high-net-worth, job-creating entrepreneurs.” 

The UAE is already a popular destination for high-net-worth individuals to live and invest in. A report last year by Henley Global Citizens found that the country attracted 5,200 millionaires in 2022, overtaking traditional havens such as the UK and US.

In particular, there has been a “second wave” of wealthy Europeans settling in the Emirates, with British property tycoon Nick Candy among the high-earners that have spoken about its appeal.

Non-doms in numbers

There were 68,800 non-doms in the UK in the 2021-2022 tax year, according to HM Revenue & Customs (HMRC). A 2022 study by Warwick University and the London School of Economics said abolishing the regime would raise £3.6 billion ($4.6 billion) a year. 

The number of Gulf national non-doms is harder to assess, because declaring residence in company filings is not the same as officially being non-resident in the UK for tax purposes and does not have to be disclosed. 

The Warwick study found that about 15 percent of non-UK domiciled individuals were from India and a similar number from the US. 

In central London, non-doms from Western Europe dominated, “confounding the stereotypes of rich Russians, Asians and Middle Eastern populations”, the report said. “As a share of the total non-dom population, this group remains relatively small.”

However, where the protections offered by the non-dom regime was a key driver for such individuals, “it is quite feasible to see a lot of people leaving the UK and some returning to the Middle East,” said Richard Thomson-Curtis, private client manager at Sanctoras. 

But there are other options for relocating non-doms, said David Lesperance, managing director of Lesperance & Associates.

Examples are Italy, Greece and Cyprus, which operate 15-year-plus non-dom regimes; Canada, Australia and New Zealand, with reduced capital gains tax, and Malta and Switzerland.

“The higher the net worth, the more this will impact them and the less ‘sticky’ [loyal] they are – they already spend time in a bunch of other places,” he said. 

Mark Davies, a London-based tax adviser, said the changes were “poorly thought through” and may undergo further reform or never take effect.