Forget non-doms, it’s the British founder exodus that matters
Non-doms leaving is hardly surprising. It’s the British founders rearranging their affairs that should make us worry, writes Simon Malkiel
The noise around a “non-dom exodus” is understandable. Non-doms have helped make London an international capital centre – as founders, backers, employers and taxpayers. The 2025 reforms will have consequences.
We should care about that impact, but we should not be surprised by the direction of travel. Non-dom status is, by its nature, a statement that your permanent home is elsewhere. So it comes as no surprise that when the rules changed, some people took stock and left – it’s to be expected from an internationally mobile group when conditions shift.
The development that should worry us even more is happening with less noise: British founders and multigenerational business owners quietly arranging their affairs so they can become non-resident.
That is a different signal. For most family businesses, “where you live” sits alongside where the board meets, where the senior team sits and where the next generation is being prepared to take over. When deeply rooted owners start building exit options, it usually reflects one thing: succession risk. And right now, that succession risk is being sharpened by the April 2026 inheritance tax reforms to Business Property Relief.
The risk to family businesses
Most family firms are asset-rich and cash-poor. Their value sits in goodwill, property, machinery and people – not in spare cash waiting to settle a bill. Business Property Relief has long recognised that reality. It helped ensure that, on death, a business did not have to be sold simply to fund inheritance tax.
The April 2026 reforms change the calculus for larger “backbone” companies. Ministers may argue the regime remains targeted, but the practical problem is simple: the tax is triggered by a valuation, not by liquidity. Even paid over time, it is still a call on cashflow – and cashflow is what funds investment and jobs.
Sir James Dyson put it bluntly on Radio 4’s Today programme: “We haven’t got billions of cash… so you have to sell the business to pay it.” And: “Its value is a multiple of its profits. So it’s paper money.”
Jo Bamford has warned that JCB “could quite easily become an American business”. Lizzy Rudd of Berry Bros & Rudd asks how a family firm can keep building long-term value when that value is “on paper and not in our pockets” unless assets – or the business – are sold.
These are not fringe voices. They describe incentives that push owners towards earlier sales, heavier borrowing or outside capital that changes the character of a business. In some cases, the cleanest way to reduce exposure is for the principal to become non-resident.
Non-doms are a distraction
For scale, Family Business UK estimates family firms employ around 13.9m people and generate £1.7 trillion of turnover. Its work with CBI Economics warns that higher succession tax exposure will be met by lower investment and fewer jobs.
This is where the story becomes two-pronged. For the next generation of British entrepreneurs, the message is that building something enduring here may carry an extra penalty at the point you hand it on. For international capital looking in, the optics are just as troubling: if even Britain’s most rooted wealth creators are building exit options, it raises questions about long-term stability.
None of this is an argument for no tax. It is an argument for a regime that targets avoidance without penalising genuine trading businesses that employ people and invest for the long term. If ministers believe the reforms are well targeted, they should be willing to test that against outcomes – investment, ownership and jobs – and adjust if the effect is to push good businesses towards sale, break-up or foreign ownership.
Otherwise we will keep debating non-doms, while the backbone businesses quietly set themselves up to leave.
Simon Malkiel is partner and head of wealth and succession at Howard Kennedy