Sarah and her husband Jack live in a leafy part of south-west London, own a holiday home on Spain’s Costa Brava and send their two young daughters to private schools. They work hard – Sarah is in PR and Jack is a cryptocurrency trader – and are well paid. Yet they want out of the UK.

“All our costs have gone up, from our mortgage rate to school fees, and living in London is really expensive,” says Sarah, who is in her 40s and did not want to reveal her real name.

“The addition of VAT [on school fees] will affect us. If you’re working hard, you want to have some reward for it. I know we are privileged, but we feel we are constantly chasing our tails.”

The couple both do their jobs remotely and are planning to move abroad. “And we are not the only ones seriously considering it,” Sarah adds. “It’s the biggest topic of conversation with friends at dinner parties or at the school gates.”

Scarcely a day goes by without a headline claiming the rich are checking out of Britain due to fears over the scale of Labour’s tax raid on high earners. VAT will be levied on private school fees from January and speculation is rife that the Chancellor will announce increases to capital gains tax and inheritance tax in the Budget on October 30.

The Adam Smith Institute, a think tank, has argued that people are leaving because the country is “a hostile culture for wealth creators”. It forecast that the share of the population who are millionaires will plunge by 20pc over the next five years, from 4.5pc now to 3.6pc.

Henley & Partners, which helps wealthy investors move overseas, says Britain is on track to lose a record 9,500 millionaires this year – more than any other country in the world except China. The firm says the number of UK enquiries it is receiving for alternative citizenship and residency programmes is the highest ever, with a record number of actual applications made in the second quarter of this year, representing a 325pc increase compared to the first quarter.

Au revoir, non-doms

Most of those leaving are non-doms, who reside in the UK but are domiciled elsewhere for tax purposes and pay UK tax only on the money they earn in this country. Some 74,000 people claimed non-dom status in 2022-23, according to HM Revenue & Customs.

While these wealthy foreigners have always come and gone, they now seem to be leaving in higher numbers, or are not coming here in the first place. Sales of super-expensive London homes over £10m fell 22pc in the year to July compared to the preceding 12-month period, according to Knight Frank estate agency.

Supply of these pricey properties is up: in the capital’s 12 central and most expensive postcodes, the number of homes on the market is 6.2pc higher now than last year, according to website Propcast.

Under changes announced by the Tory government, the existing non-dom tax regime is ending in April 2025. Labour’s first Budget will likely include details of further restrictions, although the Chancellor is understood to be rowing back over fears that it would force so many foreigners to leave it could hit tax revenues.

A further non-dom crackdown is what really has them worried. Marilyn McKeever, from the private wealth team at the law firm BDB Pitmans, says: “Many non-doms are leaving the UK or have already left. More have a bag by the door and are nervously waiting for the Budget.”

In May, a non-dom rushed to buy a house in the Bahamas and has now moved there and put his house in Knightsbridge on the market. As with the middle-class family in south-west London, it is the worried dinner party chatter and WhatsApp messages among friends that have prompted these moves.

Philip Hillier, of HG Christie estate agency, says: “One of the reasons he bought so quickly was because a lot of his non-dom friends were discussing leaving as well. He wanted to get out here before there was a rush and has since referred three friends to us.”

However, non-doms are far from the only ones eyeing the exit – there are the likes of Sarah and James, too.

“Tax is the primary topic of conversation with our clients at the moment, whether they are non-doms or not,” says Roarie Scarisbrick, from the buying agency Property Vision. “The general Labour narrative about impending doom does not help, either.”

It’s not all about tax, though

Robert Salter, of accountancy firm Blick Rothenberg, says: “Covid and the move to flexible working has resulted in many people partially relocating to countries such as Spain and France and becoming ‘treaty resident’ in that location. And, in my experience, they are primarily moving for non-tax reasons such as a better lifestyle overseas.”

And this doesn’t only apply to the top 1pc. Sarah and James aren’t non-doms or hugely wealthy – they have a mortgage, after all. “The quality of life in the UK just isn’t there anymore,” Sarah says. “Things don’t work and it all feels a bit downhearted.”

Crime is another factor. “Crime is bad all over the world but London is perceived to be up there with the worst,” says Charles McDowell, of the buying agency McDowell Properties.

“Many wealthy people now also see the UK as unwelcoming and unrewarding, and a lot of younger ones are heading elsewhere. It’s a brain drain like the 1970s, at a time when people are inherently more mobile anyway.”

Where are they going?

Locations such as Dubai and Singapore are increasingly enticing young high earners and ambitious professionals, says Toby Downes, of the buying agency Haringtons UK. “These places offer favourable tax regimes and vibrant career opportunities that are becoming hard to resist.”

Jason, a banker, has just secured a job in Dubai. He has given notice to his London firm and will start before Christmas; his wife and two children will move from their home in south-east England to join him “as soon as they can”.

“I’m not a non-dom and although I’m a high earner compared to many, working in the City is nowhere near as lucrative as it used to be,” explains Jason, who is in his early 40s and wanted to speak under a pseudonym.

“Moving to the UAE seems like a no-brainer. My six-figure salary is similar to what I’ve been getting in London, but my new employer will pay my rent for a year and pay for my children to attend an international school. It’s also exciting to be starting somewhere new when the UK feels so depressing right now.”

The UAE is a top location for many people looking to leave the UK; it’s the main place Sarah and James are considering, too. The country offers guaranteed sunshine, air-conditioned shopping and zero income tax, and it’s also a popular choice for schooling.

GEMS Education, one of the world’s largest private school operators, has seen a steady increase in UK families moving to its network of 44 schools in the UAE in the past two years.

Among them are the children of David Harkin, chief executive of the global education company 8billionideas, who recently relocated with his family to Dubai from the UK.

“Dubai has become one of the most innovative places when it comes to business and education, so it made absolute sense to relocate here and to also have better access to different parts of the world,” Harkin says. “Also, in Dubai, the schools’ extra-curricular activities are second to none, while the safety of the city appeals.”

Portugal is seeing increased interest thanks to its climate, lifestyle and perks such as no inheritance tax and a range of visas designed to appeal to high-net-worth individuals and their families. The Portuguese Chamber of Commerce in the UK says more than 7,500 British people have attended its “Moving to Portugal” events.

There has also been a boom in rich international relocators to Italy, where the non-Italian income of residents is tax-free so long as they pay a flat fee of €200,000 (£167,500) every year.

Diletta Giorgolo Spinola, of Sotheby’s International Realty, says: “There has been a dramatic increase in people of all nationalities, including non-doms previously resident in the UK, looking to move to Italy. In Milan, 80pc of all overseas purchasers are flat-tax buyers.”

Other British people are heading for the sunny shores of Spain. Charlie Mullins, founder of Pimlico Plumbers, announced last month he was selling his £10m-plus London penthouse to become a permanent resident in Marbella, while Nick Trafford, of Lucas Fox, an estate agency, says Barcelona is becoming more popular with British expats.

“Barcelona has fantastic international schools and is a cosmopolitan city with a cooler climate and great connections to the rest of Europe,” Trafford says. “There are plenty of expats here – I play golf with English friends every week.”

The traditional wealthy playground of Switzerland also features prominently on relocators’ radars, as much for its low income and wealth taxes as for its confidentiality, security and political stability. A new report by Knight Frank found that security and privacy were the top priorities for high-net-worth individuals when considering whether to relocate to a new country.

And, of course, there’s Monaco, which has no tax on income, capital gains or property, though in June was added to the anti-money laundering “grey list” of jurisdictions subject to increased monitoring.

Camilla Dell, of the buying agency Black Brick, says: “Property values in Monaco are the highest in the world, so the option to own and live a good life there is reserved only for the mega-wealthy. My dad also used to say that it was better to pay your tax than to be bored to death living in Monaco.”

Better the devil you know?

While they might be setting up home elsewhere, many rich people are not severing their ties with the UK entirely. Charles Miéville, of the law firm Forsters, says: “Many clients continue to hold their properties as investments or trophy assets – somewhere to stay when they invariably spend some time in London throughout the year. So we haven’t seen the fear of tax changes result in a glut of properties coming to the market.”

And, for many wealthy people based in the UK, relocating is easier said than done, according to Jo Eccles, of the buying agency Eccord, who was talking recently to one of her hedge-funder clients who wants to leave London.

“When we ran through all options – Switzerland, Dubai and so on – they were all eliminated for reasons such as his wife wouldn’t enjoy them, or he didn’t want to raise his children there,” Eccles says. “In the end, he concluded he would probably stay put.”