As many as one in 10 non-doms are estimated to have left the UK following part of a major post-election policy change that was previously branded an “opportunity” for Jersey.
What is a non-dom?
A non-dom – or domicile – describes someone who is a UK resident but is deemed as being outside of the UK for tax purposes.
This special tax status means that individual was able to pay tax on the money they earn in the UK, but not abroad – unless that money is put into a UK-based bank account.
However, in the October 2024 UK Budget, the Labour Chancellor confirmed that non-dom status would be abolished from April 2025.
Both the External Relations Minister and senior finance professionals in Jersey and Guernsey have previously speculated that changes to non-dom rules will make the islands more attractive to a larger pool of potentially wealthy residents.
Did anyone end up fleeing?
A previous paper published by Warwick University, which was claimed to have been influential in the UK government’s decision to scrap the special status, estimated that just 0.36% of non-doms would depart the UK. This, it suggested, would generate more than £3bn in tax revenue.
But a new paper authored by former Treasury economist Chris Walker claims that this was “overly optimistic” and has instead estimated that as many as 10% of non-doms have already departed the United Kingdom since the rule change.
“It seems reasonable that non-doms living in the UK for such a long time would have a strong attachment to the country and have developed strong ties, to the extent it would override tax considerations. The problem, however, is that the study then took this elasticity (and that of another relatively small non-dom group) and applied it to the whole of the non-dom population to infer that very few non-doms would depart from the UK if they were similarly taxed,” the report explained.
“Strong indications are that significant numbers of non-doms, particularly wealthier individuals, have either already left the UK or will leave soon,” it later added.
Another estimate incoming… in 2027
That is, however, just one estimate.
Her Majesty’s Revenue and Customs has this month committed to publishing its own estimate – but not for another two years.
Chief Executive John-Paul Marks, the Jersey-born former leader of the Scottish Civil Service, recently told Parliament’s Public Accounts Committee that the UK tax authority would receive data on the effects of the changes in January 2027 and would publish an formal evaluation soon after.
What’s been the benefit for Jersey?
Joe Moynihan, the CEO of Jersey Finance, acknowledged that the changes were “likely” to have an impact, but said that it was “too early” to establish the full scale of this in relation to the island.
“Without a doubt, there has been a far greater focus on the international mobility of high net worth individuals and families generally in recent years,” he explained.
Those individuals and families are all looking for a stable jurisdiction that can give them reassurance in terms of their structuring, asset protection and succession planning, and Jersey ticks those boxes
Jersey Finance ceo Joe Moynihan
“That’s been driven by greater complexity in the make-up of families and their sophistication in wanting to access more diverse global opportunities, as well as instability and uncertainty in certain parts of the world.”
Mr Moynihan said that the political decisions in the UK around the ‘non-dom’ rules had “caused families to review their international footprint”.
“Invariably those individuals and families are all looking for a stable jurisdiction that can give them reassurance in terms of their structuring, asset protection and succession planning, and Jersey ticks those boxes,” he continued.
“In that light, overall, our private wealth sector continues to grow – largely because Jersey is so integrated with global markets.
“There is likely to be an impact off the back of the changes to the UK non-dom rules, but it is really too early to assess the full impact of that in isolation.”