Icelandic billionaire Thor Björgólfsson has shifted his tax residency from the United Kingdom to Italy and relocated his investment firm Novator from London to Zurich, marking the latest high-profile business departure from Britain amid changes to the country’s tax regime under the Labour government.
Known as Iceland’s first billionaire, Mr. Björgólfsson told Bloomberg that the exodus of wealthy entrepreneurs from the UK is significant and ongoing. The businessman attributed his move largely to Labour’s 2025 decision to abolish the non-domiciled (non-dom) tax status, a system that previously allowed certain individuals to avoid paying full UK tax on foreign earnings. The replacement Foreign Income and Gains Regime offers a four-year exemption for eligible newcomers but has not stemmed concerns over increased tax burdens.
“The number of investors moving overseas has escalated rapidly,” Mr. Björgólfsson said. “It’s amazing how fast it has happened. The collateral damage is exploding elsewhere.” He also called on the government to consider introducing a flat-rate tax system, similar to Italy’s, aiming to attract entrepreneurs and business leaders.
Mr. Björgólfsson’s move to Milan comes after a notable financial turnaround following the 2008 global financial crisis. He was formerly the largest shareholder in Iceland’s Landsbanki, which collapsed during the crisis. He faced criticism for his involvement and later expressed regret for his role in the bank’s failure.
The tax changes overseen by Chancellor Rachel Reeves, who replaced the non-dom rules in April 2025, also extend inheritance tax to overseas assets owned by wealthy foreigners. In an effort to soften the impact, a cap of £5 million per decade on inheritance tax for former non-doms was introduced a year later. However, Mr. Björgólfsson suggested the measure comes too late for many who have already invested abroad.
The departure of Novator from London reportedly resulted in approximately 20 job losses, raising concerns about the broader impact on the UK’s financial services sector. Mr. Björgólfsson’s warnings coincide with the anticipated appointment of Andy Burnham as Prime Minister, amid speculation that a future Labour administration could implement further tax increases, including raising capital gains tax rates to align with income tax.
A Treasury spokesperson defended the government’s position, stating, “If you make your home in Britain, then you should pay your taxes here too. That is why we abolished the non-dom tax status.” The spokesperson highlighted that the reforms aim to address tax system fairness while enabling £39.5 billion in public service investments over five years, including funding for the National Health Service. They also noted that the UK’s main capital gains tax rate remains lower than those in other G7 European countries and praised the new residency-based tax system for its simplicity.