Editor’s Note: This story originally appeared in On Balance, the ARTnews newsletter about the art market and beyond. Sign up here to receive it every Wednesday.The wealthy appear to be forsaking the UK in droves, and newly initiated tax rules don’t appear to be helping. Several art dealers and advisers told ARTnews they are worried about how those rules will impact the country’s art market and whether it will push more collectors to take their art-buying elsewhere.While Brexit may have started the exodus, the current Labour government’s scrapping of non-domicile tax rules is taking the most heat. Last October, Labour announced in its budget that the UK’s current rules for non-doms, or UK residents whose permanent home is outside the country for tax purposes, would be abolished. The new rules, set to go into effect in April, will require all UK residents to pay tax on income, regardless of where they earned it. The UK Treasury predicts the policy will raise £33.8 billion over the next five years. And, of course, it’s set to affect the wealthy the most. (Those who support ending the tax break argue that the money raised could be used to offset the UK’s strangled public services.) A 2024 report by investment migration advisers Henley & Partners and global analytics firm New World Wealth found that over 10,000 millionaires (including 78 centimillionaires and 12 billionaires) departed the UK last year, a 157 percent increase from 2023. Meanwhile, UBS’s 2024 Global Wealth Report predicts that 500,000 millionaires will leave the country by 2028. (The Henley report defines a millionaire by liquid net worth, while UBS includes assets like art and property.)The new tax rules, according to Henley & Partner’s Peter Ferringo, “rob the UK of billions of investment capital, especially for Americans keen to leave the US.”“Brexit and the closure of the UK’s investor visa route mean that there are few arriving high net-worth people to replace [the departed millionaires] in the tax system,” he told ARTnews.The situation is further exacerbated, according to Henley analysts, by the “dwindling importance” of the London Stock Exchange, the US and Asia’s dominance in tech, and the UK’s high capital gains tax.Critics have slammed the Labour party’s move, though it bears mentioning that the previous Conservative government was also working on an overhaul of the non-dom tax regime. In January, the UK announced that the new tax regime would be phased in more gradually, but many have argued that too many millionaires—and art collectors—are being pushed out the door either way.“Successive governments have done little to support the London art market,” Jussi Pylkkänen, the former global president of Christie’s and the founder of London-based Art Pylkkänen art advisory, told ARTnews.“This is not smart because there is a great structure here, a tremendous number of young artists, agents, and museums who support them, and auction houses and galleries that bring countless wealthy, international collectors who buy in both the primary and secondary markets,” he said. “Art collectors are not all millionaires, by any stretch of the imagination. It is obvious that foreigners come to the UK to enjoy art and the cultural works of this country. To discourage them from visiting regularly, or even to settling here, is obviously a mistake on so many levels.”French art dealer Almine Rech, who has locations in London, Paris, Brussels, New York, Shanghai, Monaco, and Gstaad, told ARTnews that some of her London-based collectors have already left the country.“Once people go away and settle somewhere else, usually they don’t come back—when money leaves a place, it is not good,” she said. As for whether London is losing its status in the global art world—a topic of heavy conversation last fall—Rech speculated that the city might see Russian collectors return once the war in Ukraine is resolved. “I believe the UK has a strong capacity to react,” she added.Milo Dickinson, the managing director of London-based Simon Dickinson Gallery, which primarily deals in Old Master paintings, similarly told ARTnews that the ongoing exodus is a “worrying development.”“It will impact London’s position in the art market as well as damage lots of businesses downstream from the art market, like high-end restaurants, framers, conservators, and shippers,” he said. Dickinson added that, while his gallery—which had a record year in 2024—will not be “hugely affected” due to its “very international client base,” younger art dealers are likely to be “discouraged from setting up shop in London.”Not all art dealers are losing sleep over the UK hemorrhaging millionaires, though. While Austrian dealer Thaddaeus Ropac said his London location has felt the phenomenon, with some of his UK-based clients changing their address, the city remains “a critical mass” and he is not expecting a “big change” in the London art market’s overall sales activity. “London is the biggest art market in Europe for turnover, and the city has always managed to reinvent itself,” he said. “Collectors will always come to London, so I’m rather relaxed.”Ropac did just announce a new gallery in Milan last month, to add to his other locations in Paris, Salzburg, and Seoul, but he insisted those plans were years in the making and unrelated to Brits or other erstwhile UK residents moving to the city.(Since 2017, Italy has offered a favorable flat rate tax for ultra-high-net-worth-individuals who moved their tax residency to the country. However, the government doubled the rate to €200,000 last year.) Jo Stella-Sawicka, a senior director of Goodman Gallery, which has spaces in London, New York, Johannesburg, and Cape Town, agreed with Ropac. “London’s collector base has always been a dynamic mix of British and international clients who consider the city their home, whether for business, education, or lifestyle,” she told ARTnews. “While shifts in non-dom status have influenced this landscape, we’re also seeing a positive trend with more American and South Asian collectors spending significant time in London and investing in homes here.”Sotheby’s doesn’t seem concerned either. Julian Washington, the house’s head of tax, heritage, and UK museums and fiduciary, told ARTnews that reports of millionaires leaving the country should be viewed with “a bit of skepticism.” “It’s true that many wealthy people are leaving due to the change in the country’s tax regime, but the tax tail should not bite the dog,” he said. He raised questions about whether paying less in taxes really was “the single most important factor” for these members of the elite. “If it is, they’ll have to build a completely new life somewhere else.”Christie’s and Phillips declined to comment on the new rules, while the UK Treasury did not respond to ARTnews’s questions about how they might impact the art market.As with much else in the art market, we’ll just have to wait and see whether it’s the optimists or the pessimists who are proved correct.