The U.K. is supposedly losing out on over £3 billion in consumer spending and £320 million in VAT each year, as more British citizens take advantage of the growing trend of working abroad as digital nomads.
A recent study from Public First estimates that around 165,000 Brits have moved overseas to take up long-term work visas that allow them to live and work in other countries without becoming full tax residents.
Popular destinations like Bali, Lisbon, and Tbilisi have become attractive spots for those seeking more affordable living and a higher quality of life. While these new lifestyles initially offered lower living costs and better amenities, the increase in digital nomads is now having a significant impact on the UK’s economy and public finances, with more people considering making their new locations permanent, according to City AM.
Many Brits have reportedly chosen this route because of the lower cost of living in these foreign destinations, which has become even more appealing as living expenses continue to rise in the U.K. With better living standards and more digital nomad-friendly economies developing abroad, many of these workers are choosing to stay longer than initially planned.
These long-term work visas became increasingly popular during the pandemic, with many countries eager to attract skilled professionals. Many of the programs require applicants to prove they earn at least £3,000 a month.
While the U.K. still collects income tax, national insurance, and capital gains tax from these digital nomads, it is missing out on VAT and the broader economic activity that would typically come from their spending within the U.K.
The study also found that the countries hosting these digital nomads are investing in infrastructure to support them. New coworking spaces, gyms, and private healthcare services are being created to cater to the influx of foreign professionals, which in turn encourages spending and boosts the local economy.
The growing awareness of these opportunities is reflected in recent polls, which show that a significant portion of U.K. adults are considering working as digital nomads in the next few years. If just a fraction of them follow through, the U.K. economy could lose billions more in consumer spending and VAT.
The study also raised concerns about the long-term tax implications for the U.K. If self-employed digital nomads choose to change their tax residency or set up their businesses abroad, the U.K. could lose billions in tax revenue — figures that would be noticed by the Treasury.
This report comes amid broader concerns about the U.K. losing its most productive citizens. A recent study showed that the U.K. lost a record number of millionaires in 2024, and many wealth advisors are warning that the government’s decision to abolish the non-dom status is prompting wealthy individuals to leave the country before the change takes effect in April.
