Tax certainty is becoming a more important consideration than headline tax rates for wealthy internationally mobile taxpayers deciding where to live, invest and build businesses, according to tax advisers at Blick Rothenberg.
Elisa Sofocli, a partner at the audit, tax and business advisory firm, said the UK’s challenge was not simply the transition from the former non-dom regime to the Foreign Income and Gains (FIG) regime, but the uncertainty surrounding the direction of future tax policy.
“The issue the UK faces isn’t necessarily the change from the old non-dom to the new Foreign Income and Gains (FIG) regime; tax systems have to evolve, but that taxpayers don’t know where the rules are going next,” she said.
“Taxpayers can plan around a tax rate; it is much harder to plan around a tax system that may not still exist in five years’ time. If people are making ten- or twenty-year decisions about where to live, invest and build their businesses, certainty matters enormously.”
The comments come amid continued debate over the UK’s ability to attract and retain wealthy international taxpayers following the abolition of the non-dom regime and introduction of the FIG system.
Sofocli said countries were increasingly competing on their broader tax propositions rather than simply offering the lowest rates.
“Countries aren’t just competing on tax rates anymore; they’re competing on the overall tax proposition they offer,” she said.
“The UK’s new FIG regime has some real advantages, particularly in terms of simplicity, but it is a very different proposition once those first four years have passed. Those with the broadest shoulders have the longest legs, and for someone who genuinely has a choice about where to live, work and build their future, it’s entirely rational that the longer-term tax position will form part of that decision.”
She argued that the debate over wealthy taxpayers should focus less on whether they were paying enough tax and more on the factors that determine whether internationally mobile individuals choose Britain in the first place.
“The debate should not simply be ‘are wealthy people paying enough tax?’ or ‘are taxes too high?’ The more useful question is: ‘what makes someone choose the UK when they have the financial freedom to choose somewhere else?’”
“Tax is part of that answer, but so is certainty, stability, access to talent and markets, education and quality of life. If the Government wants growth, they need to think not just about how much tax they can collect from people who are in the UK, but why people would choose to be here in the first place.”
Sofocli said the comparison with lower-tax jurisdictions could also obscure the deliberate efforts some countries were making to attract internationally mobile wealth.
“It may be tempting to reduce the issue to ‘other countries have lower taxes than the UK’, but that misses the point. Those other countries are deliberately designing regimes to attract internationally mobile wealthy individuals.”
She also cautioned against interpreting individual departures as evidence of a mass exodus of wealthy taxpayers.
“The headlines around wealthy taxpayers changing their tax residence understandably attract attention, but caution should be taken in turning individual departures into evidence of a mass exodus. But the real risk isn’t just the people leaving – it is the people who never arrive.”
According to Sofocli, the latest tax statistics did not show a dramatic exodus of wealthy taxpayers, but she warned that official data could take time to capture behavioural changes.
“The 2024/25 tax statistics did not show a dramatic exodus of wealthy taxpayers, but behavioural change takes time to appear in tax data. There is a much bigger blind spot, the statistics can show who has left the UK, but not how many people looked at the UK and decided not to come here in the first place.”
The economic significance of internationally mobile high earners is also concentrated among a relatively small number of taxpayers, she said.
“Very large individual tax contributions can be difficult to replace. At a very high level, replacing hundreds of millions of pounds of tax would require the equivalent tax contribution of tens of thousands of people earning around the National Living Wage.”
“That isn’t an argument that one taxpayer matters more than thousands of others. It is a reminder that broadening the tax base is about more than simply increasing the number of taxpayers, it is also about retaining those who make exceptionally large contributions.”
Sofocli said the UK needed to expand employment and its tax base, but argued that the objective should be economic growth rather than repeatedly compensating for taxpayers who leave.
“The UK needs more people in work and a broader tax base, but that should be done to drive growth, not to replace taxpayers who have left. The goal should be to grow the tax base, not continually refill the hole in it.”
Her comments highlight a broader challenge for policymakers: tax receipts can be measured after taxpayers arrive or leave, while the decisions of people who never choose Britain are considerably harder to quantify.
For internationally mobile wealth, the attractiveness of the UK may therefore depend not only on the tax bill today, but on whether taxpayers believe they can predict what that bill will look like years into the future.
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