Millionaire flight – can I escape tax if I leave the UK?
You may have noticed headlines (or YouTube videos) talking about a “non dom exodus” from the UK. The message seems to be: the UK is no longer an attractive place for those looking to build wealth, especially entrepreneurs.
The argument runs further: punitive tax measures from the Labour government are driving millionaires out of the country, especially to the United Arab Emirates (UAE) and other “havens” (e.g. in the EU). However, is the grass truly greener?
Below, our team of financial planners show how taxes are often more complex than people realise when relocating overseas – leading to costly mistakes. Whilst expatriating may be right for some, the majority of Brits will benefit more from a UK-based financial plan.
With a robust strategy and tax plan, thriving financially at home in 2025 is still possible.
The myth of the “simple escape”
It cannot be denied that many people in the UK are having a harder time with tax. In March 2024, the overall tax burden was the highest since WW2. This was even before Labour took power, raising the lower and higher rates of capital gains tax (CGT) in Oct 2024, and introducing a higher rate of Employer National Insurance rate in April 2025 (15%).
It’s no wonder headlines occasionally trumpet stories of celebrities and entrepreneurs “fleeing” Britain to escape the taxman. At face value, relocating to a tax-friendly jurisdiction could save hundreds of thousands, even millions, in annual tax liabilities.
For example, a UK resident earning £1 million per year may face a marginal tax rate of 45%. However, in Dubai, personal income tax is currently zero.
The difference is stark, but so are the complications. HMRC takes a very active interest in those who leave the UK, attempting to abandon their tax obligations. In particular, there are two key areas where expatriates can fall foul of UK tax rules:
- Statutory Residence Test (SRT). This “test” governs whether you are considered UK resident for tax purposes. It is notoriously complex, and many believe they can “escape” UK tax if they simply stay out of the UK for 183 days. However, it is possible for HMRC to deem someone “UK resident” with as few as 16 days in the UK (e.g. if they retain a home, business interests or family ties). This could still trigger UK tax liabilities, even if you “live” abroad.
- Temporary Non-Residence Rules. Suppose you relocate overseas and later return to the UK within 5 years. In this case, certain income and gains realised during your absence may become taxable retrospectively. If you “escaped” for a year or two, you may find the taxman waiting on your return.
The case for the UK
Although it may not be popular to promote the UK right now, it remains one of the world’s leading jurisdictions for entrepreneurship and innovation.
For business owners, there are supportive ecosystems, capital markets and government incentives. The UK offers individuals world-leading legal protections, property rights and estate planning frameworks. Ours is still a well-regulated, prosperous and opportunity-rich country – with a great legacy, despite the challenges.
Staying doesn’t mean resigning yourself to punitive tax bills. In 2025-26, individuals still have access to a wealth of legal strategies to reduce needless liabilities, putting more hard-earned income back in their pockets.
For instance, maximising pension contributions can greatly optimise your tax plan. Those earning over £100,000 can “reinstate” their tax-free Personal Allowance using contributions, which is otherwise lost £1 for every £2 over £100,000.
For those earning over £60,000, contributing to a pension can bring your income below the threshold for the Child Benefit High Income Charge (removing or reducing it). Those focusing on building their retirement nest egg, pensions allow you to claim tax relief at your marginal rate of income tax – i.e. effectively investing gross income instead of net.
ISAs and other tax-free allowances can offer other efficient ways to build wealth. You can invest (or save) up to £20,000 in your ISAs each tax year in 2025-26, shielding your capital gains, dividends and interest payments from the taxman. Outside of the ISA “wrapper”, the Annual Exempt Amount (AEA) lets you shield an additional £3,000 in capital gains from CGT.
Invitation
Escaping the UK tax net might sound tempting, but the reality is fraught with pitfalls. Of course, for some individuals, emigration may be appropriate. Yet, tax should never be the primary motivator for such a life-altering decision, especially when complex residency tests, reputational risks and potential financial penalties are involved.
Rather than looking for the exits, we encourage high earners to seek expert guidance. If you want to ensure you’re taking the right steps to safeguard your financial plan, please get in touch.
Please note:
Your capital is at risk. Investments can go down as well as up. Past performance is not indicative of future results. Tax treatment depends on individual circumstances and may change. This content is for information only and not investment advice. Any decision to invest is the reader’s own. Diversification is key to managing risk. Market volatility affects investment values. Inflation erodes savings. Liquidity risks may prevent quick access to funds.
