The UK’s wealthy, from foreign billionaires to City of London bankers, are rushing to put their money away after Prime Minister Rishi Sunak surprised the country by calling a summer election.
Some are cashing in on investments, paying bills that may soon rise or leaving the U.K. altogether, according to interviews with more than two dozen high-net-worth individuals, who asked not to be named, and advisers to wealth.
The ruling Conservatives and the opposition Labor Party have pledged to scrap preferential tax treatment for non-residents – wealthy foreigners living in the UK, also known as non-doms. Labor leader Keir Starmer has extra plans to tax the rich and polls show his party more than 20 points ahead.
“I’ve had clients before who were reluctant to panic,” David Lesperance, a Poland-based tax and immigration adviser to the ultra-wealthy, told Sunak in calling the July 4 vote. He “pulled the pin on the election grenade”.
The UK was expected to lose around 3,200 high-net-worth individuals last year, the most in Europe and double the level in 2022, citizenship advisory firm Henley & Partners estimated. Britain’s reputation for legal and political stability has been shaken by Brexit turmoil and the change of five different Conservative prime ministers since 2016.
As well as losing ground to well-heeled territories such as Monaco, Dubai and Switzerland, it has also had to compete with European neighbors such as Italy and Greece, which have set up programs to lure wealthy foreigners. The UK scrapped its so-called golden visa program in 2022.
“It will be a serious and entirely avoidable mistake if these changes go ahead as announced,” Dominic Lawrance, a London-based partner at global law firm Charles Russell Speechlys.
https://x.com/Keir_Starmer/status/1736794624969101540
Labor also wants to increase taxes on private equity professionals and private school fees. As part of its no-dom proposal, it aims to remove inheritance tax exemptions for overseas assets held in trust structures. The idea of this big change has helped raise the price of insurance to cover potential taxes on wealthy estates.
Notable non-domes
Non-dome status dates back to 1799, when it was introduced to protect colonial investments. Recent notable non-doms include former HSBC Holdings Plc chief executive Stuart Gulliver and former Conservative Party deputy leader Michael Ashcroft.
Sunak’s wife Akshata Murty was also revealed in 2022 to benefit from the status. After a media firestorm, Murty said he would pay UK taxes on his global income, partly derived from Indian software giant Infosys Ltd.
Labor leaders have previously estimated they could raise around 3 billion pounds ($3.8 billion) from lifting the regime, echoing recent academic research that predicted fewer than 100 wealthy status foreigners would leave afterwards from the country.
The number of non-doms is already in decline, almost halving to 68,800 in the decade to 2022, partly through an earlier rule change to ban individuals from using the benefit permanently. However, those who hold the status pay more than £8 billion in British tax a year, according to the latest official figures.
A City law firm has received more than three dozen inquiries about the non-significant changes in recent months, ranging from multibillionaires to centi-millionaires, according to people familiar with the matter. One person has now left for Switzerland, while another is preparing to move to Italy, said the people, who asked not to be identified as the details are private.
A former London-based hedge fund manager originally from outside the UK is moving to another European country, partly because of frustrations over the political direction of the two main parties. Another ultra-wealthy UK national with property investments is similarly looking at ways to switch from living full-time in the UK to just three months a year, with the balance spent between low-tax territories such as Dubai and Monaco.
Simon Goldring, a tax and trust adviser to the ultra-wealthy at global law firm Ogier, said he has a small number of direct cases of British residents wanting to move overseas, mostly from UK nationals frustrated with taxes reaching post-war highs.
“They are fed up,” added Goldring, who himself moved to Dubai last year from the UK. “It’s a sad indictment.”
Ahead of the 2019 election, the threat of left-wing Labor leader Jeremy Corbyn helped drive some of Britain’s wealthiest individuals away. Jim Ratcliffe, the billionaire founder of chemical giant Ineos, has said it was a factor in his move around 2018 to Monaco, where residents face no income or capital gains taxes.
However, Starmer has made more of an effort to appeal to this demographic. Iceland Foods founder Malcolm Walker and former JPMorgan Chase & Co executive Charles Harman were among 120 business leaders who signed a letter of support from Labor last week.
For the “mass affluent” group of Britons, the election has accelerated the demand to future-proof their finances, according to wealth advisers.
While neither party has yet published their manifestos, Starmer has said he will impose a 20% value added tax on private school fees to raise £1.7 billion for the state school system. This is leading some deep-pocketed parents to consider paying fees for years – which can run up to £65,000 a year – to avoid that extra cost.
“I have friends in this scenario,” said Ben Yearsley, investment consultant at Fairview Investing in Bristol. They are “looking at prepaying two years’ worth,” he added.
The UK’s political upheaval is also deterring wealthy foreigners from coming to the country.
A high-net-worth Middle Eastern individual, who asked to remain anonymous, has canceled plans to move his family from Monaco to London as his children approach school age. A wealth manager for billionaires said clients are pulling back on UK investment at the moment, particularly in the real estate sector often favored by the super-rich.
Lesperance, a former non-significant in Britain during the late 1990s, said a billionaire client’s trust holdings would increase his UK inheritance tax liability by more than 1,000% to around £400m per due to Labor reforms abroad.
“We’re fueling the engines,” he said. “And we got our landing pass.”
