Non Dom Tax Changes Cost Treasury £400 Million in Lost Stamp Duty Revenue

Fresh research from Knight Frank reveals the abolition of the non-dom regime has resulted in significant losses to government property tax revenue. The estate agent’s analysis indicates that declining sales of luxury homes valued at £5 million or above in London between March 2024 and May 2025 have led to a £401 million reduction in stamp duty receipts.

The findings stem from prime property transactions falling below anticipated levels during this 14-month period. May 2025 alone witnessed a 14% year-on-year decline in prime residential property sales in London, according to combined data from Knight Frank and property data specialist LonRes.

The prime property market, traditionally dominated by wealthy non-dom buyers, has experienced a notable downturn as tax system modifications have prompted potential investors to look elsewhere. The Labour government is reportedly contemplating reversing changes to the non-dom regime that eliminated offshore trust protections, which previously sheltered assets from UK inheritance tax.

Since April’s removal of this tax shelter, wealthy individuals have increasingly relocated to more tax-friendly jurisdictions such as Italy and the UAE. The Italian government now offers new investors a favourable flat €200,000 tax on foreign income and assets over 15 years, with inheritance tax exemptions included.

Treasury projections suggested the non-dom status removal would generate £34 billion by 2029-30. However, economists at the Centre for Economics and Business Research suggest these gains could be neutralised if 25% of non-doms exit the UK. The Treasury maintains that Britain remains an attractive destination, highlighting lower capital gains tax rates compared to other G7 European nations.

The government’s stance reflects a delicate balance between maintaining international competitiveness and addressing tax system inequalities. As global wealth centres compete for high-net-worth individuals, the UK’s policy shifts continue to shape investment patterns in the luxury property sector.