Monaco، Italy، Switzerland، Dubai. They’re just a few of the destinations trying to lure away the U.K.’s uber wealthy ahead of proposed changes to the country’s divisive non-dom tax regime.

Almost two-thirds (63%) of wealthy investors said they plan to leave the U.K. within two years or “shortly” if the Labour government moves ahead with plans to ax the colonial-era tax concession، while 67% said they would not have emigrated to Britain in the first place، according to a new study from Oxford Economics، which assesses the implications of the plans.

Paying tax on income

The U.K.’s non-dom regime is a 200-year-old tax rule، which permits people living in the U.K. but who are domiciled elsewhere to avoid paying tax on income and capital gains earnings overseas for up to 15 years. As of 2023، an estimated 74،000 people enjoyed the status، up from 68،900 the previous year.

Labour last month set out plans to abolish the status، expanding on a pledge set out in its election manifesto and stepping up earlier proposals by the previous Conservative government to phase out the regime over time.

It comes as Prime Minister Keir Starmer has pledged to improve fairness and shore up the public finances، with further announcements expected early next week at the Labour Party’s annual conference and during the Oct. 30 Autumn budget statement.

Finance Minister Rachel Reeves has said that scrapping the program could generate £2.6 billion ($3.45 billion) over the course of the next government. However، Oxford Economics’ research، which was produced earlier this month in collaboration with lobby group Foreign Investors for Britain، estimates the changes will instead cost taxpayers £1 billion by 2029/30.

CNBC reached out to the Treasury for comment and did not immediately receive a response.

“We are ringing out the alarm bell that this is a perilous time،” Macleod-Miller، CEO of Foreign Investors for Britain، told CNBC over the phone. “If the government doesn’t listen they’ll put at risk revenues for generations.”

Under the proposals، the concept of “domicile” will be eliminated and replaced with a resident-based system، while the number of years in which money earned abroad goes untaxed in the U.K. will be cut from 15 to four.

Inheritance tax

Individuals will also have to pay inheritance tax after 10 years of U.K. residency and would remain liable for 10 years after leaving the country. They will also be prevented from avoiding inheritance tax on assets held in trust.

However، Macleod-Miller، a private wealth practitioner who launched the lobby group in response to the proposals، said the changes would stymy wealth generation and is instead calling for a tiered tax regime.

According to the Oxford Economics research، which surveyed 72 non-doms and 42 tax advisors representing a further 952 non-dom clients، virtually all (98%) said they would emigrate from the U.K. sooner than previously planned if the reforms were implemented. The 72 non-doms surveyed were said to have invested £118 million each into the U.K. economy.

The majority (83%) cited inheritance tax on their worldwide assets as their key motivator for leaving، while 65% also referenced changes to income and capital gains tax.