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The affluent are seemingly leaving the UK in large numbers, and recent tax regulations don’t seem to be helping. Several art dealers and advisors expressed concerns to ARTnews about how these rules will impact the country’s art market and potentially drive more collectors to seek art elsewhere.
While Brexit may have sparked this exodus, the current Labour government’s decision to do away with non-domicile tax rules is causing the most uproar. Last October, Labour announced in its budget that the UK’s existing rules for non-doms, or UK residents whose permanent home is outside the country for tax purposes, would be scrapped. The new rules, set to take effect in April, will require all UK residents to pay tax on their income, regardless of where it was earned. The UK Treasury estimates that this policy will generate £33.8 billion over the next five years, primarily affecting the wealthy.
A report by investment migration advisors Henley & Partners and global analytics firm New World Wealth revealed that over 10,000 millionaires (including 78 centimillionaires and 12 billionaires) left the UK last year, a 157 percent increase from 2023. UBS’s 2024 Global Wealth Report predicts that 500,000 millionaires will depart the country by 2028. The new tax rules, according to Peter Ferringo of Henley & Partners, „deprive the UK of billions of investment capital, particularly from Americans looking to leave the US.“
Critics argue that the money raised from ending the tax break could be used to support the UK’s strained public services. The situation is exacerbated by the declining significance of the London Stock Exchange, the dominance of the US and Asia in technology, and the UK’s high capital gains tax.
While some criticize the Labour party’s move, the previous Conservative government was also working on revamping the non-dom tax regime. The UK recently announced that the new tax regime would be phased in more gradually, but many believe that too many millionaires and art collectors are being driven away regardless.
Jussi Pylkkänen, former global president of Christie’s and founder of London-based Art Pylkkänen art advisory, noted that successive governments have done little to support the London art market. He emphasized the importance of the art ecosystem in the UK, with numerous artists, agents, museums, auction houses, and galleries attracting wealthy international collectors. Pylkkänen believes discouraging these individuals from visiting or settling in the UK is a mistake.
French art dealer Almine Rech, who has galleries across multiple cities, mentioned that some of her London-based collectors have already left the country. She expressed concern that when money leaves a place, it can have negative consequences. However, she believes that London has the potential to bounce back in the global art world, especially if Russian collectors return post the resolution of the conflict in Ukraine.
Milo Dickinson, managing director of the Simon Dickinson Gallery, shared his worries about the ongoing exodus impacting London’s position in the art market and affecting various related businesses. While his gallery may not be significantly affected due to its international clientele, he believes younger art dealers may be discouraged from establishing themselves in London.
Thaddaeus Ropac, an Austrian dealer, acknowledged the impact of the exodus on his London gallery but remains optimistic about the city’s art market. He views London as a critical hub that can adapt to changes and attract collectors. Ropac recently opened a gallery in Milan, a move he had planned for years, unrelated to the UK exodus.
Jo Stella-Sawicka, a senior director of Goodman Gallery, also sees a mix of challenges and opportunities in London’s art scene. She noted a positive trend with American and South Asian collectors spending time in London and investing in homes.
Sotheby’s Head of Tax, Heritage, and UK Museums and Fiduciary, Julian Washington, expressed skepticism about reports of millionaires leaving the country. While acknowledging the impact of tax changes, he believes that London’s art market will persevere. Er stellte Fragen, ob weniger Steuern wirklich der „einzige wichtigste Faktor“ für diese Mitglieder der Elite seien. „Wenn ja, müssen sie irgendwo ganz neu leben.“ Christie’s und Phillips lehnten es ab, zu den neuen Regeln Stellung zu nehmen, während das britische Finanzministerium nicht auf die Fragen von ARTnews antwortete, wie sie sich auf den Kunstmarkt auswirken könnten. Wie bei vielem anderen im Kunstmarkt werden wir einfach abwarten müssen, ob die Optimisten oder die Pessimisten recht haben.