The UK may have reached a tipping point in wealth outflows amid an ‘accelerated exodus’ of high net worth individuals (HNWI), according to Utmost Wealth Solutions global wealth specialist, Marc Archeson.

Archeson noted that many HNWIs, especially resident non-doms or those who have been UK resident for more than four years and UK-domiciled people, have already left or were planning to leave.

With many HNWIs in the UK seeking to move abroad, other nations are competing to welcome families, with countries such as the UAE, Italy, Switzerland, Portugal, and Greece proving attractive through a combination of flat taxes and lack of inheritance tax (IHT).

“One of the primary motivators for non-doms and their families leaving the UK since the October 2024 Budget is the erosion of IHT protections on existing settlements,” Archeson stated.

“Many accumulated their wealth prior to coming to the UK and were able to shelter it under previous structures. With the removal of these protections on existing trust structures, they face IHT on an ongoing basis – both on the assets settled within the trust and upon leaving the UK.

“Additionally, if they have been UK resident for 10 years or more, any remaining assets in their estate will be subject to a 40 per cent IHT charge upon death. IHT at 40 per cent really does make the UK an outlier compared to other jurisdictions.”

While some HNWIs may not be able to leave the UK currently, particularly those with children in education, they are actively restructuring their wealth to mitigate the changes while they remain here, according to Archeson.

“Crucially, no one publicly has suggested that these changes will result in them extending their time in the UK, so people are likely to leave at a greater rate than average in the coming years,” Archeson warned.

Furthermore, Archeson believed that the new Foreign Income and Gains (FIG) regime will not halt the exodus of HNWIs from the UK.

He argued that the FIG regime, which enabled people to bring offshore income and gains into the UK tax-free for four years, only serves those who do not intend to stay in the UK for the long term.

“Without meaningful reversals or adjustments, the risk is that wealth will exit the UK permanently and it’s hard to see currently where we are attracting new wealthy individuals from,” Archeson concluded.

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