The abolition of the non-dom regime in the UK could cost the country £6.5bn by 2035, according to a paper published by the Adam Smith Institute (ASI).

In the government's Autumn Budget yesterday (30 October), Chancellor, Rachel Reeves, confirmed that the non-dom regime would be scrapped from April 2025.

The think tank’s research assessed the potential economic impact of 5,800 of the 21,100 remittance basis non-doms exiting the UK.

It stated that the cost of £6.5bn would be due to lower investment in capital, a fall in tax revenue, reduced consumption across the economy, and a corresponding loss of jobs.

The ASI forecast annual losses of £500m in investment and £3bn in capital stock.

It also highlighted that non-dom individuals contributed £6.2bn in tax revenue, averaging around £84,000 per person.

Alongside the abolition of the non-dom regime, the think tank pointed to other reasons that could influence non-doms to leave the UK, including the increased taxes on high net worth individuals (HNWI), the UK’s ‘poor’ economic outlook, and “hostility” towards wealth creators.

The ASI argued that it was in the country’s interest to attract and retain as many non-doms as possible, but that the UK’s current offering to HNWIs was “uncompetitive”, especially when compares to European ‘rivals’ such as Switzerland, Spain, and Italy.

“In a globalised economy where capital and talent are highly mobile, making the UK less attractive to HNWIs could have significant repercussions,” said the authors of the report, ASI research associate, Mitchell Palmer, and ASI director of research & education, Maxwell Marlow.

“Other countries, such as Switzerland, Italy, and Spain, are actively attracting these individuals with favourable tax regimes.

“The UK risks diminishing its competitive position if it does not offer comparable incentives.

“Additionally, current attitudes toward wealth creators may further discourage those who contribute substantially to the economy through investment and job creation.”

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