Will London Benefit from New York‘s Tax Changes?
Recent policy proposals in New York City under Mayor Zohran Mamdani are prompting some of the city’s wealthiest residents to consider relocation, with London frequently mentioned as a potential destination. However, a direct comparison of the tax landscapes suggests London may not offer the financial haven some anticipate.
Mayor Mamdani has advocated for increased taxation on high earners and corporations to fund initiatives like free public transport and childcare. Specifically, proposals include an additional 2% tax on incomes exceeding $1 million (approximately £758,000). While the implementation of these changes requires approval from the New York State legislature, the possibility is already influencing financial planning among the city’s elite.
Historically, London presented itself as a viable alternative, sharing similarities with New York as a global financial and media hub – a relationship once playfully termed “NYLon.” However, recent shifts in UK tax policy have significantly altered the equation.
The previous “non-dom” status, which attracted wealthy foreign residents by limiting UK tax liabilities on overseas income, has been abolished. Currently, individuals new to the UK benefit from a four-year exemption from global taxation, provided they haven’t resided in Britain within the last decade. However, beyond this period, income exceeding £125,000 is subject to a 45% tax rate, a threshold significantly lower than the $25 million (£19 million) income level at which New York’s top state income tax rate of 10% (on top of federal taxes) applies. Furthermore,the UK imposes a 40% inheritance tax on estates exceeding £320,000,while New York has no equivalent tax.
Looking ahead, potential changes to UK tax law could further diminish London’s appeal. Proposals currently under consideration include a potential mansion tax on high-value properties, a wealth tax on assets exceeding £10 million, and an exit tax for individuals relocating assets out of the country.
Given these factors, it appears unlikely that a substantial influx of New Yorkers will choose to relocate to London solely based on tax considerations. This is a missed possibility for London, which could benefit from the capital and entrepreneurial talent - notably in the AI sector concentrated in areas like Shoreditch and East London – currently considering alternatives to New York. A proactive approach from UK policymakers, focused on attracting international investment, would be necessary to capitalize on this potential shift, but currently appears improbable.
