Non-domiciled (non-dom)’s philanthropy has played a vital role in shaping the UK’s social investments ecosystem.

The UK’s philanthropic landscape has long benefited from the generosity of non-domiciled (non-dom) individuals, whose significant contributions support education, arts, and community initiatives.

However, the recent non-dom tax reforms risk reshaping this ecosystem, potentially diminishing charitable donations and social investments as UHNWIs reconsider their financial commitments.

The Role of UHNWIs in the UK’s Philanthropic Landscape

Non-doms have been pivotal to the UK’s philanthropic ecosystem, contributing billions to charitable initiatives annually.

From funding museums and universities to investing in grassroots community programmes, their impact extends across sectors.

Case studies reveal that 96% of surveyed non-doms have made philanthropic contributions, averaging £5.8 million per individual over the past decade.

By facilitating such generosity, the previous non-dom regime indirectly bolstered the UK’s socio-economic fabric.

Philanthropy not only bridges funding gaps in critical sectors but also enhances global perceptions of the UK as a centre for arts and education.

Risk to Philanthropic Contributions

The shift to a residency-based tax system significantly alters the financial calculus for UHNWIs.

With global assets now subject to inheritance tax (IHT) after 10 years of residency, and a 10-year IHT tail for those departing, non-doms may reduce their philanthropic activities to prioritise family wealth preservation.

Survey data from Oxford Economics highlights these risks. For instance, one non-dom entrepreneur, who has consistently donated £1.5 million annually to UK-based charities, plans to relocate if the reforms are implemented.

Their departure would result in the loss of substantial funding for medical research and clean energy projects.

Impact on Social Sectors

Sectors heavily reliant on private philanthropy, such as the arts, education, and community development, face an uncertain future.

Universities could lose vital funding for scholarships and research programmes, while cultural institutions may struggle to maintain exhibits and programmes.

Local community initiatives, often supported by non-dom donations, may also experience funding shortfalls, affecting vulnerable populations.

Preserving the Philanthropic Ecosystem

Policymakers, non-dom and stakeholders must act to ensure that philanthropy retains robust social investments despite tax reforms.

Options include introducing targeted incentives, such as enhanced charitable tax reliefs, to encourage ongoing contributions.

Wealth advisors can also play a critical role by integrating philanthropy into broader wealth planning strategies.

As the UK navigates these tax changes, preserving the philanthropic ecosystem is crucial for sustaining the social investments that enrich communities and reinforce the nation’s cultural and educational legacy.

Cover image by Freepik

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