The shrinking millionaire population and why it matters

The UK has recorded its lowest number of millionaires since the financial crisis, with the Adam Smith Institute estimating a fall to 442,000 individuals. A drop of 7% in a single year.

News headlines have focused on falling property prices and non‑dom reform, but we have to ask ourselves what does this mean for the UK tax base?

This isn’t just about wealthy people leaving. It’s about how the UK’s tax structure interacts with global mobility, asset values, and the individual’s appetite for taxing capital.

Current ‘wealth’ taxes

The UK’s tax system relies on three forms of wealth linked tax revenue:

• Capital Gains Tax
• Stamp Duty Land Tax
• Inheritance Tax

Each is sensitive to the behaviour of high-net-worth individuals. A shrinking millionaire population affects all three, but in different ways.

CGT receipts fall when fewer gains are realised or when individuals relocate, placing disposals outside UK tax scope.

SDLT falls when property transactions slow down.

IHT becomes more volatile when wealth is held offshore or individuals move to jurisdictions with favourable succession rules.

A shrinking millionaire population affects each of these differently, but the common thread is exposure: the UK’s tax system leans heavily on a relatively small group of people and that group is now smaller.

Non‑dom reform: the catalyst rather than the cause

Labour’s overhaul of the non‑dom regime has been widely cited as the trigger for many wealthy individuals leaving the UK but the UK had already become less competitive for internationally mobile wealth long before the reform was introduced.

If we look at what has happened in the last decade:

• CGT rates rising to 20%/24% with further increases for certain business disposal reliefs
• The annual exempt amount cut from £12,300 to £3,000
• A tightening of HMRC’s approach to property rich structures
• The 2027 change bringing pension death benefits into the IHT net
• Increasing scrutiny of Business Property Relief

• Higher employer national insurance costs

The non‑dom reform was simply the moment when many individuals re‑ran the numbers and concluded that the UK no longer offered a compelling environment for business expansion or long-term tax planning.

Taxing wealth while wealthy individuals become more internationally mobile

Andy Burnham’s comment that Britain has “overtaxed labour and undertaxed wealth” signals a shift in how tax is thought of and the timing is not great. The UK is exploring ways to tax wealth at a time when individuals are demonstrating how easy it is to relocate.

This creates a clear tension:

• The government wants to broaden the tax base by taxing capital.
• The capital in question is becoming increasingly internationally mobile.

A wealth tax whether it be annual or one-off would emphasize this tension. Wealth taxes function best when the underlying tax base is stable and predictable. The UK’s is neither. Instead, it is cyclical, mobile, and highly sensitive to behavioural change.

Property values: the quiet driver of millionaire attrition

The ASI attributes part of the decline to falling property prices. This matters because UK wealth is generally property heavy. When property values fall:

• CGT liabilities shrink
• SDLT receipts declines
• IHT exposure becomes more uneven

This shows how dependent the UK’s tax system is on property inflation and what happens when that inflation reverses. A tax base built on rising asset values is exposed when those values fall.

Parliamentary staffing

The Guardian reports that Burnham has appointed three new Parliamentary Private Secretary from the Socialist Campaign Group. This is not tax policy, but it is a signal: Burnham is hiring those that are supportive of structural wealth taxation.

Tax reform is rarely driven by spreadsheets alone. It is driven by ideology, narrative, and political momentum.

What kind of tax system can survive volatility?

The UK’s millionaire current decline in population makes you wonder whether a tax system can be reliant in raising revenue where it relies heavily on a small, mobile, and increasingly globalised segment of society?

If the UK continues to shift towards taxing capital, it will need to confront three realities:

• Wealth is more mobile than income.
• Property values are cyclical, not guaranteed.
• Behavioural responses can erode tax bases faster than policy can rebuild them.

The ASI data shows that the top 1% now contribute 29.1% of all income tax – another reminder that the UK’s fiscal stability depends heavily on a small, internationally mobile group whose behaviour can shift quickly.

Final thoughts

The fall in UK millionaires is not simply a symptom of non‑dom reform or property prices. It is a stress test of the UK’s tax model. As the political appetite for taxing capital grows, the question is no longer whether the wealthy will leave but whether the tax system can adapt to a world where they can.