The UK’s Move to Scrap Non-Dom Status Expected to Drive Expats and Nationals Back to Gulf
The UK’s decision to abolish non-domicile tax status from April 2025 is anticipated to lead to an increase in expatriates and returning nationals to the Gulf region, according to experts interviewed by AGBI.
Under the current non-dom rules, individuals living in the UK can claim permanent residence in another country, allowing them to avoid paying tax on earnings outside the UK.
UK Chancellor Jeremy Hunt recently announced plans to eliminate this 200-year-old regime, requiring new arrivals to pay the same amount of tax as other citizens after an initial four-year period.
Experts suggest that this change will prompt Gulf nationals and other wealthy individuals currently residing in the UK to consider relocating elsewhere, with the UAE being a viable option.
“The UAE is already a top expat destination for UK residents due to its political stability, international connectivity, favorable 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.
“These changes may lead more UK expats to reconsider their long-term plans and choose to base themselves permanently in the UAE.”
Hunt’s proposals represent a significant shift in the UK tax landscape, with financial implications for both 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 whom 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 by Henley Global Citizens found that the country attracted 5,200 millionaires in 2022, surpassing traditional havens such as the UK and US.
In recent years, there has been a noticeable increase in wealthy Europeans settling in the Emirates, with British property tycoon Nick Candy among those highlighting its appeal.
The exact number of Gulf national non-doms is challenging to determine, as declaring residence in company filings is not the same as officially being non-resident in the UK for tax purposes and does not require disclosure.
However, where the protections offered by the non-dom regime were 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, noted Richard Thomson-Curtis, private client manager at Sanctoras.
There are alternative options for relocating non-doms, such as 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,” said David Lesperance, managing director of Lesperance & Associates.
Mark Davies, a London-based tax adviser, criticized the changes as “poorly thought through” and suggested they may undergo further reform or never take effect.
