A senior international tax accountant has observed that staying in the UK may not be favourable for those with significant wealth, especially with current discussions about changes to tax laws. Mark Clubb, chairman of TEAM, emphasises the growing importance of expert advice to navigate these potential shifts and avoid costly errors.
One critical issue under debate is the proposed abolition of non-domiciled (non-dom) status. This longstanding policy was originally designed to support London as a global trading hub. It allows international professionals, such as US bankers, to contribute to the UK economy without facing double taxation on inheritance or worldwide income. If this status is eliminated, many of these individuals may leave, posing a real risk to the UK’s tax revenues and economic diversity.
Another area of concern is the possible removal of business property relief, a key tool in estate planning for family-owned businesses and farming enterprises. This relief enables assets, such as family businesses, to pass to the next generation without triggering excessive tax liabilities. Its abolition could severely affect mid-sized private companies and agricultural holdings. For example, third-generation business owners and farmers may find it difficult to transfer their assets without incurring significant tax burdens, potentially leading to business closures or relocation.
These changes could accelerate an already growing trend of UK residents considering offshore domiciliation to protect their wealth. However, moving domicile is not straightforward. It requires severing all ties with the UK, including property ownership and income, and establishing permanent connections in another country. This process typically takes three to five years and involves complex personal and legal considerations.
The landscape is further complicated by uncertainties in global tax policies. Political changes and shifting tax regimes create unpredictability, making long-term planning difficult. For instance, while Portugal’s NHR tax regime faced potential abolition in 2022, it has since been revised and may continue in a modified form. Similarly, the UK government has suggested a move towards a residence-based inheritance tax system, which could subject expatriates to UK taxes for up to 10 years after leaving, potentially offering long-term relief on non-UK assets after this period.
Despite these uncertainties, generic solutions like “golden visas” or blanket recommendations for relocation to low-tax jurisdictions such as Portugal, Greece, or Malta often fall short. Every individual’s situation is unique, requiring tailored advice that considers their specific needs and circumstances. Additionally, HMRC’s unpredictable and often case-by-case approach to tax enforcement adds another layer of complexity.
TEAM, with its network of international advisers, is well-placed to assist expatriates in navigating these challenges. Wealth migration is likely to increase as governments worldwide seek to address budget shortfalls by targeting the wealthy through tax reforms. Effective planning begins with understanding the available options, considering residency by investment programmes, and avoiding pitfalls that could attract HMRC scrutiny.
Navigating the evolving tax environment demands proactive planning and expert advice. With significant changes on the horizon, individuals and businesses must carefully evaluate their positions and take informed steps to safeguard their assets while complying with shifting regulations.
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.
