Henley & Partners have released their Private Wealth Migration Report for 2024, revealing that the UK is expected to experience a net loss of 9,500 millionaires this year. This figure is more than double the 4,200 who left in 2023. Historically, the UK, and London in particular, attracted wealthy individuals from mainland Europe, Africa, Asia, and the Middle East from the 1950s through to the early 2000s. London’s multicultural nature was a major draw for high net worth (HNW) and ultra-high net worth (UHNW) individuals.
According to Jeremy Knowland, the UK head of Citi Private Bank, the appeal of London lay in its reputation as a city welcoming people from across the globe. However, this trend began to reverse about a decade ago. In the six years following the Brexit referendum (2017-2023), the UK saw a total of 16,500 millionaires emigrate.
The country’s previous rules for non-domiciled individuals (non-doms) were a significant factor in attracting wealth to the UK. Knowland explained that the ability to hold offshore assets was appealing for those planning to reside in the UK temporarily. However, the situation has shifted since the Conservatives announced plans to abolish the non-dom regime in the Spring Budget of 2024. Following Labour’s victory in the general election in July, the government proposed even harsher rules, such as eliminating the 50% discount for non-doms bringing foreign income into the UK in the first year of the new regulations.
There were also discussions about including foreign assets held in a trust within the UK inheritance tax framework. These measures were expected to raise £1 billion, aiming to address the £22 billion shortfall in the UK’s economy. Despite these plans, Henley & Partners’ data suggests that the number of millionaires choosing to leave the country has been steadily rising. The lack of compelling tax incentives to stay is unlikely to reverse this trend.
Fears that Labour’s policy changes may not generate the expected revenue have led some to anticipate a watered-down version of the original proposals. Experts predict that changes could be made to the inheritance tax protections for non-UK resident trusts, with the possibility of grandfathering existing structures, though nothing has been confirmed as of yet.
Mark Clubb, the executive chairman at Team, noted that UHNW and HNW individuals were initially attracted to the UK because of their trust in the tax and legal systems. Now, with all the uncertainty surrounding the future of non-dom rules, this trust has eroded. He attributed this to the complexity and unpredictability of the UK tax system, compounded by the government’s crackdown on tax avoidance and the broader uncertainty linked to Brexit.
Clubb also highlighted the increasing complexity of the UK’s tax system, with frequent legislative changes making it difficult for individuals and businesses to plan their finances. While Sir Keir Starmer has pledged not to increase income tax, national insurance, or VAT, other taxes affecting wealth—such as exemptions and reliefs for inheritance tax, capital gains tax, and pensions—are outside this pledge.
There is also concern over the government’s aggressive stance on historically accepted tax planning tools, including employee benefit schemes. While these efforts aim to promote fairness and reduce wealth inequality, they may also create a perception of a hostile environment for wealthy individuals seeking to manage their finances.
Clubb pointed out that everyday tax avoidance strategies like pensions, ISAs, bond wrappers, and corporate structures, while offering some protection, are not immune to future government rule changes that could limit their benefits.
The UK’s exit from the EU has further contributed to the uncertainty. Brexit has altered the tax landscape, and potential changes to tax treaties and the overall business environment have left many concerned about future stability. The UK’s financial services sector has undergone significant transformation post-Brexit, with Paris emerging as a growing competitor to London. Many financial professionals have relocated to Europe due to the restrictions on providing advice to clients in the European Economic Area (EEA) from the UK.
Given these developments, experts believe that UK-based firms are not fully prepared for the potential outflow of wealth, with the process of expanding into other jurisdictions becoming more complicated. Despite the data showing increasing emigration among HNW and UHNW individuals, Knowland stated that Citi Private Bank had not yet seen its non-dom clients, who typically have assets exceeding £25 million, expressing a desire to leave. Nonetheless, he acknowledged the possibility of losing some clients, though he expressed hope that it wouldn’t happen.
TEAM plc (LON:TEAM) is building a new wealth, asset management and complementary financial services group. With a focus on the UK, Crown Dependencies and International Finance Centres, the strategy is to build local businesses of scale around TEAM’s core skill of providing investment management services.
