The abolition of non-dom status could lead to cumulative GDP losses of £3.9bn over the current parliament if 25 per cent of those affected left the UK, according to the Centre for Economics and Business Research (CEBR).

Its report, which used Office for Budget Responsibility (OBR) macroeconomic modelling, assessed the potential impact of non-dom taxpayers leaving the UK relative to the OBR's baseline forecast.

It claimed that departures would lead to “sweeping damage” to the economy, with falls in GDP, investment, and employment.

The government has introduced the FIG regime in place of non-dom status, whereby anyone who has been tax resident in the UK for more than four years will pay UK tax on their foreign income and gains.

Individuals who come to the UK after a period of at least 10 consecutive tax years of non-UK residence are able to claim UK tax relief on foreign income and gains that accrue during their first four years of UK residence.

If 25 per cent of non-doms left the country, total tax receipts could be £4.6bn lower than forecast by the OBR in the final year of the forecast, and cumulative tax receipts could come in £17bn lower under the current parliament relative to the OBR's baseline forecast, according to the CEBR.

The report, commissioned by the Land of Opportunity, estimated there would be 3,200 fewer jobs in the private sector in the final year of the forecast if 25 per cent of non-doms left.

Consumption was found to be “by far” the biggest channel of lost output over the near term, with the CEBR estimating that cumulative losses of consumption amounted to £3.8bn by the fifth year of the forecast.

Business investment was estimated to be approximately £30m less in each year of the forecast relative to the OBR, taking the cumulative loss to around £200m over the next five years.

If 10 per cent of non-doms were to leave the UK, the report estimated that cumulative GDP losses would total £1.6bn and the cumulative tax take would be £8.5bn lower than OBR estimates over the current parliament.

Meanwhile, if 50 per cent of non-doms were to leave, it found that cumulative GDP losses would be £7.8bn and cumulative tax receipts would be £31.2bn lower than OBR estimates over the current parliament.

Commenting in response to the report, an HM Treasury spokesperson said: “We do not recognise these figures. The independent OBR has confirmed that the changes to the regime will raise £33.8bn over the next five years.

“Replacing the outdated non-dom tax regime with a new internationally competitive residence-based system addresses unfairness in our tax system, attracts the best talent and investment to the UK, and ensures everyone who is a long-term resident in the UK pays their taxes here.”

Land of Opportunity founder, Andrew Barclay, stated: “It is increasingly clear that abolition of non-dom status is hugely damaging to our economy and the government’s finances.

“But there is a chance still to arrest the numbers departing. There are two practical steps the Chancellor could take immediately: reverse its decision to impose inheritance tax on global assets; and give guarantees that the tax authorities will not treat the government's own Temporary Repatriation Facility as a tax avoidance scheme.”

CEBR head of forecasting and thought leadership, Sam Miley, added: “Our findings suggest that the recent changes to the non-domiciled tax regime would be negative, albeit mildly, for the UK economy.

“This contrasts somewhat with the government’s assessment that these policy changes will not bring significant macroeconomic impacts.

“At a time when the fiscal room for manoeuvre is tight, even fine margins like these could have notable effects on policy stability over the medium term, potentially eating up a chunk of the remaining headroom.”

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