Wealthy people in the UK, from foreign billionaires to City of London bankers, are rushing to shelter their money after Prime Minister Rishi Sunak surprised the country by calling a summer election.
Some are cashing in investments, paying off bills that may soon rise or leaving the UK entirely, according to interviews with more than two dozen high-net-worth individuals, who asked not to be named, and wealth advisers.
The ruling Conservatives and the opposition Labour party have both pledged to scrap preferential tax treatment for non-domiciled residents — rich foreigners living in the UK, also known as non-doms. Labour leader Keir Starmer has additional plans to tax the wealthy and polls show his party more than 20 points ahead.
“I have had previously hesitating clients go into panic mode,” David Lesperance, a Poland-based tax and immigration adviser for the ultra-rich, said on Sunak calling the July 4 vote. He “pulled the pin on the election grenade.”
The UK was expected to lose a net 3,200 high-net-worth individuals last year, the most in Europe and double 2022’s level, citizenship advisory firm Henley & Partners estimated. Britain’s reputation for legal and political stability has been rocked by the upheaval of Brexit and the chop-and-change of five different Tory Prime Ministers since 2016.
As well as losing ground to popular territories for the well-heeled such as Monaco, Dubai and Switzerland, it has also had to compete with European neighbors like Italy and Greece, which rolled out programs to lure wealthy foreigners. The UK scrapped its so-called golden visa program in 2022.
“It will be a serious, and entirely avoidable, misstep if these changes proceed as announced,” Dominic Lawrance, a London-based partner at global law firm Charles Russell Speechlys.
Labour also wants to add taxes on private equity professionals and private school fees. As part of its non-dom proposal, it aims to remove inheritance tax exemptions for overseas assets held in trust structures. The idea of this major change has helped push up the price of insurance to cover possible levies on wealthy estates.
Notable non-doms
Non-dom status dates back to 1799, when it was introduced to protect colonial investments. Recent notable non-doms include former HSBC Holdings Plc Chief Executive Officer Stuart Gulliver and onetime Conservative Party Deputy Chairman Michael Ashcroft.
Sunak’s wife, Akshata Murty, was also revealed in 2022 to benefit from the status. After a media storm, Murty said she would pay UK taxes on her global earnings, partly derived from Indian software giant Infosys Ltd.
Labour leaders have previously estimated they can raise about £3 billion ($3.8 billion) from scrapping the regime, echoing recent academic research that predicted fewer than 100 wealthy foreigners with the status would subsequently leave the nation.
The number of non-doms is already declining, falling by almost half to 68,800 in the decade to 2022, partly through an earlier change in the rules to stop individuals using the benefit permanently. Still, those retaining the status pay more than £8 billion in British taxes a year, according to latest official data.
One City law firm has received more than three-dozen enquiries related to non-dom changes in the past few months, ranging from multibillionaires to centi-millionaires, according to people familiar with the matter. One individual has now left for Switzerland, while another is preparing to move to Italy, the people said, who asked not to be identified as the details are private.
One London-based former hedge fund manager originally from outside the UK is moving to another European nation, partly due to frustrations over the political direction of both main parties. Another ultra-rich UK national with property investments is similarly considering ways of switching from living full time in the UK to only three months a year, with the balance spent between low-tax territories such as Dubai and Monaco.
Simon Goldring, a tax and trust adviser for the ultra-wealthy at global law firm Ogier, said he has a handful of live cases of British residents wanting to relocate overseas, mostly from UK nationals frustrated with taxes hitting post-war highs.
“They’re fed up,” added Goldring, who himself relocated to Dubai last year from the UK. “It’s a sad indictment.”
Before the 2019 election, the threat of left-wing Labour leader Jeremy Corbyn helped prompt some of the UK’s richest individuals to exit. Jim Ratcliffe, billionaire founder of chemicals giant Ineos, has said it was a factor in his relocation around 2018 to Monaco, where residents don’t face income or capital gains taxes.
Starmer, though, 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 Labour-backing letter last week.
For the “mass-affluent” cohort of Britons, the election has accelerated demand to future-proof their finances, according to wealth advisers.
While neither party has published their manifestos yet, Starmer has said he’d impose a 20% value-added sales tax on private school fees to raise £1.7 billion for the state school system. That’s making some deep-pocketed parents consider paying years of fees — which can run to £65,000 annually — to avoid that extra cost.
“I’ve got friends in this scenario,” said Ben Yearsley, investment consultant at Fairview Investing in Bristol. They “are looking at pre-paying two years’ worth,” he added.
The UK’s political swings are also putting off wealthy foreigners coming to the country.
One high-net-worth individual from the Middle East, who asked to remain anonymous, has canned plans to relocate with his family from Monaco to London as his children approached schooling age. A wealth manager for billionaires said clients are pulling back UK investments for now, especially in the real estate sector often favored by the super-rich.
Lesperance, a former non-dom in Britain during the late 1990s, said one billionaire client’s trust holdings would increase his UK inheritance tax liability more than 1,000% to about £400 million due to Labour’s non-dom reforms.
“We’re fueling up the engines,” he said. “And we’ve got our landing permission.”
