The £34bn cost of Reform UK’s “Britannia card” proposal

Reform UK is proposing a “Britannia card” that would let wealthy foreigners pay a £250k fee to move to the UK and live here exempt from all tax on their foreign assets. All fees received would be distributed, “Robin Hood”-style, to the 2.5 million lowest-paid workers in the UK.

Reform UK don’t include any analysis of the cost of their proposal. Our analysis of OBR data suggests the cost would likely be around £34bn over five years.

We believe there are three very serious problems with the policy.

First, it would discourage highly skilled professionals from moving here – they couldn’t afford the £250,000. For the first time in the UK’s history, an ex-pat arriving here would be immediately subject to full UK tax (and likely also tax in their home country). That’s a big tax increase: the Reform UK proposal would make the UK uncompetitive.

Second, all the recent changes to the non-dom regime mean that any Government would struggle to persuade the very wealthy that the “Britannia card” would really provide a lifelong exemption, so take-up would be very limited.

Third, and most seriously, the card would provide a very large and expensive tax windfall to a small number of very wealthy people who are already here. Office for Budget Responsibility data shows that this would amount to £34bn of lost Government revenue over five years. That would have to be funded by either tax increases or spending cuts.

A short history of non-doms

People born abroad but living in the UK, and who plan to return abroad¹This is a very crude summary of what a “non-dom” is – the actual law is complex and uncertain, based on common law rather than any legislation. There is a good summary from the Chartered Institute of Taxation here. are “non-doms”.

For decades, non-doms were only subject to UK income and capital gains tax on their UK income and gains. Offshore income and gains were only taxed if “remitted” – i.e. brought into the UK. This favourable method of taxation was called the “remittance basis“. And, if they died, a non-dom was only subject to inheritance tax on their UK assets.

But this all changed in the 2010s:

• In 2008, the Government reformed the non-dom rules and introduced a £30,000 fee. Anyone who’d been on the remittance basis for seven out of the previous nine years would have to pay £30,000 each year to keep that status. About 5,000 people paid the fee.
• In 2012, a new £50,000 annual fee was introduced for people who’d been on the remittance basis for 12 out of the previous 14 tax years.
• In 2015, an even higher band was introduced: a £90,000 annual fee for people who’d been on the remittance basis for 17 out of the previous 20 tax years.
• There were significant reforms in 2017. From that date people who had been UK-resident for 15 out of the previous 20 tax years were automatically considered “deemed UK‑domiciled”. But a specific “safe habour” was created²Often called a “loophole”, but given it was clearly intended, it wasn’t in any sense a “loophole”. – before becoming UK domiciled, a person could settle their non-UK assets into an offshore “excluded property trust” – and these assets would (with care) remain outside UK income, capital gains and inheritance tax indefinitely. This was therefore a less dramatic change than it appeared to be. At the same time, the £50,000 fee was increased to £60,000. There is an excellent House of Commons Library briefing paper on these changes.
• Then in 2024, the Conservative Party announced they’d scrap the non-dom regime and introduce a modern exemption system – the Foreign Income & Gains (FIG) regime. The concept of domicile would be completely abolished and replaced with a simple count of years resident in the UK. New UK residents would be entirely exempt from tax for four years; then subject to income and capital gains tax in the usual way. Inheritance tax would apply after ten years. Property settled into excluded property trusts before April 2025 would remain untaxed, but after that trusts would cease to shield property from tax.
• Labour enacted this regime, but with one significant change: the benefit of excluded property trusts would disappear completely – historic trusts and future ones.
• All of this has caused a significant number of very wealthy non-doms to leave the UK. The figures that have been reported are not reliable, but it’s clear from numerous discussions I’ve had with private wealth, banking and legal contacts that the effect is real.³Advani, Burgherr and Summers found only a limited response by the very wealthy to the 2017 changes in the non-dom rules. However we believe that was because of the safe harbour/loophole in the 2017 changes. The current changes have no safe harbour and so we should expect a much larger response.
• Labour may be about to row-back on some of the reforms, by softening the most difficult part of the package for many non-doms: inheritance tax fully applying after ten years. My suggestion would be, after ten years, gently phase in inheritance tax, so it initially applies at a 4% rate and then goes up by 4% every year until it reaches 40%.

KPMG has written a good explanation of the rules as they stand today.

The Reform UK proposal

Reform UK is proposing to go back to the pre-2017 position, with non-doms able to pay a fee and retain the benefit of being a non-dom forever. The fee structure is, however, very different – a one-off £250,000 payment for a “Britannia card”.⁴It’s not clear to us from the Reform UK paper whether this is a once-and-forever payment, or once every ten years.

And there’s an entirely new element: the £250,000 payments will be redistributed as a cash payment to the approximately 2.5 million workers earning a full-time salary of less than £23,000. Reform UK’s “low end” estimate is that 6,000 people would buy a “Britannia card” – on that basis the policy would generate £1.6bn, meaning a £600 payment to each low-paid worker.

We have seen a complete copy of the Reform UK proposal. It doesn’t contain any analysis of the cost.⁵It also appears to misunderstand the history – it makes the (common) criticism that Labour’s changes deter non-doms, but doesn’t acknowledge that the Reform UK proposal also reverses the Conservative Party’s 2024 changes.

The full paper is here:

The problems

There are, however, several significant problems with the proposal.

It would deter high earners from coming to the UK

Whilst the proposal makes the UK more attractive to the very wealthy, it makes the UK much less attractive to the highly skilled and highly paid professionals we want to attract into the UK – for example doctors, coders, senior scientists and entrepreneurs. The effect of the Conservative and Labour reforms⁶And the old non-dom rules, but the new rules are clearer, simpler and preferable for many professionals. is that these new arrivals would be exempt from tax on foreign income for four years without paying anything. That’s attractive because high earners will often have assets/savings back home, and having those savings taxed in the UK is unattractive.⁷Particularly in the first year when two countries’ taxes would apply. But even after that things can be complicated, for example because tax-free savings products in one country (other than pensions) are usually not tax-free in another. The old non-dom rules also meant that such assets/savings were free from US tax, but the complexity of the rules (and the remittance concept) meant they were less useful to “normal” people than the new FIG regime.

The Reform UK proposal makes new arrivals fully taxable immediately – that makes the UK look uncompetitive compared to many other potential destinations. Countries like Ireland, Denmark, France, Belgium and The Netherlands have special tax regimes for an arriving worker’s first few years.⁸On the face of it, Reform UK could fix this by retaining a four year exemption, with the £250k only payable after that. However that would mean their “Robin Hood” redistribution only happens after four years – which likely undoes the immediate political attraction of the policy.

The Reform UK proposal doesn’t give any grace at all to new arrivals, unless they pay £250,000 – and that will only make sense for the very wealthy. So it will tend to deter highly paid professionals from moving to the UK.

The measure will, for the same reasons, impact the approximately 30,000 expats living in the UK who currently file on the remittance basis but don’t pay the remittance charge.

A large windfall gain for a few people – and so a £34bn cost

The proposal would give a windfall gain to a relatively small number of very wealthy people who were planning to stay here and pay UK tax, but will now pay the £250k fee instead. That’s tax that now won’t be received, and there will be no wider economic benefit (because these people were already going to be here).

The amounts involved are very large. The Office for Budget Responsibility’s assessment of the recent Conservative and Labour non-dom reforms says they raise a net £33.9bn from 2026/27 to 2029/30 (most of which is from the Conservative March 2024 reforms).⁹See the “post-behavioural costing” line near the bottom of Table 1.3 on page 8 of this document. And note that the OBR’s tax forecasts tend to be accurate – their March 2023 projections ended up being within 4% of the actual outcome.

The £33.9bn reflects tax raised from a small number of very wealthy people who would opt to buy a Britannia card and so pay no tax – it’s therefore revenue immediately lost by Reform UK’s proposal.

At first sight the cost would appear to be reduced by all the people who are non-doms under the current rules, but won’t pay the £250,000 to buy a Britannia card – they’ll now be paying tax. But that ignores “Laffer curve” effects. The experts we spoke to believe the four year FIG regime is revenue generative – there would be a net economic and tax cost of deterring highly paid (but not ultra-high net worth) people from coming to the UK. Reform UK’s proposal takes us past the peak of the “Laffer curve”, and what appears to raise revenue in a static analysis would actually lose it.

There is an additional negative factor: Reform UK are providing a much more generous regime for the very wealthy than was in place before March 2024. There are non-doms who’ve been here for many years who aren’t currently eligible for the remittance basis, but would apply for the Britannia card, and essentially zero their tax bill.

Both these factors would tend to increase the impact beyond the OBR £33.9bn figure.

We therefore believe its fair to say that Reform UK’s proposal will cost around £34bn if it was enacted before 2026/27. That sum would therefore likely have to be funded by some combination of spending cuts and tax rises.

It will attract very few wealthy new arrivals to the UK

Reform UK is hoping the proposal would attract a significant number of new arrivals to the UK – people who previously would have paid no UK tax, and will now pay the £250,000.

A critical point to note: because Reform UK would be redistributing all the £250,000 fees, none of the revenue reduces the £34bn impact on the public finances identified above.

We can put an reasonably accurate ceiling on the number of people who’d apply by looking at how many people paid the £30k and £50k annual remittance basis fees. 5,100 people¹⁰See table 7 here. paid the annual £30k charge for non-dom tax benefits when it was introduced, declining to 2,400 people paying the £30k and £50k charges in 2024. The £250k will (obviously) be attractive to a smaller number of people – it’s more expensive both as a lump-sum payment and if we compare it to the net present value of ten years’ of £30k charges (around £220k, at an 8% discount rate).

However, Reform UK are expecting 6,000 people to apply for a card, and pay the £250k fee, every year. That looks very optimistic given the historic data.

There is a more fundamental difficulty, which all the private wealth advisers we spoke to believe would lead to a very limited number of new arrivals.

The problem is that a proposal of this kind might have been realistic decades ago, but the numerous changes in the non-dom rules in the last 20 years mean that few would believe that their £250k would really give them a lifetime of tax exemption in the UK. High-net-worth individuals crave tax stability and predictability when making long-term decisions about their residence – but no Parliament can bind its successors. It follows that, unless ultra-high net worth individuals believe Reform will have a majority for two or more terms, they are very unlikely to move to the UK in the expectation the “Britannia card” will survive long-term. That’s particularly so in light of recent experience of countries making similar generous offers which are later rescinded – Spain lured highly paid foreigners with “Beckham’s law“, but in the 2020s began aggressively asserting tax against people who’d used it. Portugal recently restricted its generous non-habitual residence regime.

We therefore conclude that, even if the proposal was self-funding in principle (rather than losing £34bn) it would likely still be non-viable thanks to the history of non-dom tinkering by other political parties.

Photo of Nigel Farage by Gage Skidmore.

• 1
  This is a very crude summary of what a “non-dom” is – the actual law is complex and uncertain, based on common law rather than any legislation. There is a good summary from the Chartered Institute of Taxation here.
• 2
  Often called a “loophole”, but given it was clearly intended, it wasn’t in any sense a “loophole”.
• 3
  Advani, Burgherr and Summers found only a limited response by the very wealthy to the 2017 changes in the non-dom rules. However we believe that was because of the safe harbour/loophole in the 2017 changes. The current changes have no safe harbour and so we should expect a much larger response.
• 4
  It’s not clear to us from the Reform UK paper whether this is a once-and-forever payment, or once every ten years.
• 5
  It also appears to misunderstand the history – it makes the (common) criticism that Labour’s changes deter non-doms, but doesn’t acknowledge that the Reform UK proposal also reverses the Conservative Party’s 2024 changes.
• 6
  And the old non-dom rules, but the new rules are clearer, simpler and preferable for many professionals.
• 7
  Particularly in the first year when two countries’ taxes would apply. But even after that things can be complicated, for example because tax-free savings products in one country (other than pensions) are usually not tax-free in another. The old non-dom rules also meant that such assets/savings were free from US tax, but the complexity of the rules (and the remittance concept) meant they were less useful to “normal” people than the new FIG regime.
• 8
  On the face of it, Reform UK could fix this by retaining a four year exemption, with the £250k only payable after that. However that would mean their “Robin Hood” redistribution only happens after four years – which likely undoes the immediate political attraction of the policy.
• 9
  See the “post-behavioural costing” line near the bottom of Table 1.3 on page 8 of this document. And note that the OBR’s tax forecasts tend to be accurate – their March 2023 projections ended up being within 4% of the actual outcome.
• 10
  See table 7 here.