15 August 2025

Rachel Reeves was right about non-doms

And the right-wing press was wrong.

Photo by Christopher Furlong/Getty Images

Last spring, Britain’s newspapers and money-watchers promised a mass exodus of wealth. Labour’s plan to scrap the “non-dom” tax status, Henley & Partners warned, would drive high-net-worth individuals from Britain in droves. Henley, who make money selling passports to the globally mobile rich, said the scale would be historic, a fiscal catastrophe in the making. Within days, the spectre of a millionaire migration was front-page fact. Rachel Reeves’s first fiscal move as chancellor would unravel before it began.

HMRC’s new payroll data has proven otherwise. The number of top earners on PAYE, the best real-time proxy for high-income residents, has not collapsed. In fact, receipts from that group are holding up. There is no sign of the disproportionate departures Henley forecast, or the domino effect of rich following rich out of the UK. Crisis averted.

It is a small but pointed vindication for Reeves. The non-dom reform is still forecast to raise billions over the next five years. For once, the “wealth will flee” mantra collided with hard numbers and lost. Henley has now softened its claims, dropping “exodus” from its vocabulary. Yet the moment passed months ago; the initial campaign did its work, and it is much easier to plant a headline than to uproot it.

That asymmetry between how fast a narrative moves and how slowly facts arrive should worry Reeves more than any yacht in Monaco. The Treasury got lucky. On income, HMRC can produce monthly PAYE data, which means she had facts to fight fiction. On wealth, no such armour exists: we govern wealth in a data desert.

The UK does not have a live, comprehensive picture of who owns what. The Land Registry records transactions, but overseas owners can be hidden behind shell companies or trusts, and beneficial ownership filings are riddled with gaps. Companies House has only just begun to verify directors’ identities. Offshore holdings sit beyond the line of sight. Even the Office for National Statistics must rely on household surveys that the very wealthy rarely complete – meaning the top tail of the Sunday Times Rich List is easier to read than any official distributional table. If income taxation is conducted with spreadsheets, wealth taxation is based on back-of-envelope estimates.

This matters because income is not the only, or even the primary, source of economic power. A salaried professional in London pays income tax and National Insurance on almost all of their earnings. A landlord, by contrast, pays capital gains tax at lower rates when they sell a property, and can hold appreciated assets untaxed for decades. The gap endures because the political will to close it is as absent as the data needed to do so. HMRC knows every inch of your payslip, but they know very little about a millionaire’s investment portfolio. It should be obvious that the ultra-rich are not maintaining their lifestyle through their 9-5 wage.

Without better data, these imbalances are easier to ignore, and harder to challenge. The gains in wealth are real – property wealth has risen by £1.6trn in a decade, and the top 1 per cent hold a third of UK net wealth – but we lack the infrastructure to say, with authority, where that wealth sits and in what form. In the absence of clarity, those statistics can be disputed, delayed, or dismissed. That leaves any move to tax wealth on a more equal footing with work exposed to the same lobbying tactics that failed over non-doms, but without PAYE receipts to fight back.

The political opportunity here is unignorable. The non-dom episode showed that a robust policy, grounded in plausible revenue estimates and implemented without theatrics, can survive scare stories. Extending that logic to wealth would mean two things: first, investing in the infrastructure to know what we are taxing; and second, closing the gap between how we treat earnings from work and earnings from assets.

This is an argument for an investment in information. Without it, ministers are left defending abstractions against fiction. With it, they can decide whether taxing capital gains like income is worth the political capital, or whether tightening inheritance tax loopholes is worth risking a few seats in the South East.

The lesson Reeves will take from the HMRC release is that the rich did not run. But it should also be that knowing what the rich are doing with their wealth is politically useful. Imagine having that same clarity over who owns £10m townhouses through shell companies, or who holds vast portfolios via offshore trusts.

Labour’s second full budget in office will set the tone for the rest of its term. Governing by myth – about investment strikes, welfare fraud, or rich flight, invites those myths to govern you in return. Governing by data wonkery, on the other hand, does not guarantee a better day for Labour’s press office, but it at least allows policy to survive its first contact with reality. As the Treasury gears up for an Autumn of tax rises, this is a political lifeline worth investing in. Reeves should treat the non-dom figures as a prompt to build the institutional arsenal she will need for bigger battles ahead.

[See also: Let the non-doms leave]