At a dinner party in Chelsea this summer, the English host turned to his neighbour, a French hedge fund manager who had spent more than two decades in London. “I can’t believe you’re not paying tax,” he chided, in a jovial tone that masked his underlying discomfort.

While exaggerating slightly, the host was referring to his friend’s “non-dom” tax status: not domiciled in the UK, he keeps his offshore profits out of the country’s tax net.

The French community is the largest contingent of continental European nationals in London — and they are split like never before. A rich minority of long-term non-doms are concerned about proposed changes to the regime that threaten their future in the UK. A younger generation of French arrivals believe London trumps Paris as a place to fulfil their entrepreneurial dreams.

Many of the estimated 116,000 non-doms of all nationalities in the UK may have initially breathed a sigh of relief when the Conservative party won the general election in May. The possibility of a Labour government, led by Ed Miliband, who promised to abolish non-dom status, seemed reminiscent of the perceived anti-business sentiment and high taxes levied in France under President François Hollande.

Their relief proved to be short-lived. In the July Budget, chancellor George Osborne announced a crackdown on the regime: anyone living in Britain for more than 15 out of 20 years would lose their non-dom status.

“The proposed changes to the long-term non-dom status is really upsetting and will have a big impact in the UK, especially in London,” says David Blanc, a partner at wealth manager Vestra Wealth who has lived in London for more than two decades. “All of my clients, friends and contacts who don’t have to be based here every day are contemplating moving.”

Some of the French contingent are thinking of moving to Switzerland, or even back to France, after 2017, depending on the French election result, he says.

The proposed changes are part of an uncertain and increasingly complex tax environment for foreigners. “If there’s anything likely to upset the money that comes into the country, it’s complexity and instability,” says Edward Reed, a partner at law firm Macfarlanes.

The government also has stricter taxation of foreign-owned property in its sights. From April 2017, UK residential property will be subject to UK inheritance tax, irrespective of the ownership structure or the domicile and residence of the beneficial owner.

In France, if you fail in business, you’re blacklisted. In the UK, they encourage you to start again

Caroline Le Jeune, a partner at accountancy firm Blick Rothenberg, says this is a sign of “the inconsistency and continual change” of tax policy, which is making foreigners uncomfortable. She has a number of non-dom clients who are thinking of leaving the UK.

For many, the grumblings of a super-rich international elite fall on deaf ears. Talk of a French exodus appears overdone. Indeed, the opening of two new French schools last month in London suggests the city continues to be in high demand by the French.

The Lycée International de Londres Winston Churchill in Wembley will initially accept 500 pupils, with plans to grow to 1,200 over the next couple of years. Meanwhile, École Jeannine Manuel, an elite private day school in Paris, now has a branch in central London. The schools will cater for the children of a new generation of French entrepreneurs, who praise the city’s dynamism for business.

In 2011, Ludovic Blanc, a former investment banker, set up Blanc, an eco-friendly dry-cleaning company in Marylebone and Notting Hill. London is a great place to be an entrepreneur, he says. “There’s growth and opportunities, and unlike 10 years ago it’s not just in finance. French people are struck by the opportunities you find in London. You can change and find jobs more easily . . . and there is a general feeling that you have the right to try.” Ease of access to investors and programmes such as the enterprise investment scheme that offer tax breaks also help, he says.

Christian Mouysset moved from France to the UK for university before setting up Mediterranean restaurant group Hummus Bros a decade ago. He notes a cultural difference between the countries. “In France, if you set up a business and you fail, you’re blacklisted,” he says. “You won’t get bank loans again. In the UK, they encourage you to try, and if you fail, they encourage you to start again.”

Jerome Lussan, chief executive of Laven Partners, a consultant to hedge funds, rubbishes the notion that French non-doms are only in London for the tax regime. “In London, you’re not criticised for making money and succeeding,” says Lussan. “It’s not the same in France — they will scratch your Porsche or stub out their cigarettes on your Ducati.”