Wealthy Individuals Eye Monaco as UK Non-Dom Tax Rules Change

A significant shift is occurring among wealthy individuals in the UK, who are now accelerating their plans to relocate to more tax-favorable jurisdictions such as Monaco in response to impending changes to the non-domiciled (non-dom) tax rules. The recent Budget has announced the phasing out of the non-dom system by April 2025, which has historically allowed wealthy residents to limit their exposure to UK taxes on their global assets. The looming reforms will now impose UK inheritance tax (IHT) on worldwide holdings after residents have lived in the UK for a period ranging from three to ten years, depending on their residency length.

In anticipation of these changes, there is a notable push among non-doms, especially those in the later stages of life, to move within the current tax year. Doing so would reduce their exposure to IHT to just three years, compared to a potentially more burdensome tax situation if they were to wait until the new rules fully take effect. This urgency is underscored by the impending deadline and the desire to secure financial legacies in more tax-lenient environments like Monaco.

The reforms are projected by the Labour government to generate an additional 33 billion pounds in revenue, although this estimate is viewed with skepticism by some financial experts and the Office for Budget Responsibility, which has expressed reservations about the revenue forecasts' reliability. The expected exodus of high-net-worth individuals could have broader implications for the UK economy, as these residents explore relocation options that offer not only favorable tax conditions but also appealing climates, reinforcing Monaco's position as a prime destination for wealth migration.