It looks like the upcoming Autumn Budget might just be the last straw for many high-wealth individuals.
If you’ve been paying attention, you’ll know you’re not alone in considering whether it’s time to pack up and move to sunnier, less tax-heavy pastures.
The Budget is expected to deliver some pretty hefty tax hikes, and let’s be honest – no one enjoys watching their hard-earned wealth get chipped away by rising Capital Gains Tax (CGT) and Inheritance Tax (IHT).
However, before you head for the airport, there are a few important tax considerations to think about.
You don’t want to end up in a tax mess just because you’re rushing to mitigate paying additional liabilities.
So, let’s take a look at what’s on the horizon for you, where many of your fellow Brits are heading, and what you need to know to make a savvy move.
The big hitters in the Autumn Budget
First up, let’s get the obvious out of the way.
The Autumn Budget, set for 30 October, is expected to bring some fairly brutal changes.
Inheritance Tax is already at a whopping 40 per cent for estates over £325,000 and it looks like Labour plans to increase this.
Capital Gains Tax (CGT) is also likely to increase, squeezing the returns on any of your investments or property sales.
On top of that, pensions tax relief could be restricted, and don’t be surprised if the exemption limits for CGT get slashed.
Henley & Partners found that 21 per cent of Brits are considering moving abroad due to the Labour government’s proposed tax hikes, with 16 per cent saying the Autumn Budget itself is the decisive factor in their decision to leave.
This isn’t just a trend amongst the super-wealthy.
Sure, 9,500 millionaires are expected to leave the UK in 2024, but middle-income earners are starting to feel the pressure too.
Where to next? The hottest destinations for tax exiles
If you’re considering joining the exodus, you’ve got some popular choices.
Wealthy Brits are flocking to tax-friendly countries so here are the top destinations where your fellow Brits are settling:
- Spain: With its golden beaches and the appeal of EU residency, it’s no wonder Spain tops the list for many Brits. Just make sure you’re clued up on Spain’s Non-Resident Income Tax and what it means for your UK-based assets.
- Portugal: Thanks to the Non-Habitual Residency (NHR) programme, Portugal is a hotspot for those looking to reduce their tax exposure. You can enjoy tax exemptions on foreign income and a flat rate of 20 per cent on certain professions.
- Dubai: Dubai is ideal if you want to pay zero Income Tax. It’s the land of golden visas, and the luxury lifestyle doesn’t hurt either. Just keep in mind that the cost of living can be steep, and it’s more about sand dunes than sandy beaches.
- Australia and the US: Both are attractive options, particularly if you’re looking for an English-speaking environment. The US, while it does have estate taxes, sets the threshold much higher than the UK’s inheritance tax, making it a less painful option for those with large estates.
- Malta and Cyprus: Both islands offer favourable remittance-based tax regimes and are increasingly becoming top choices for Brits looking to escape the UK’s tax burdens.
Remember, the grass often looks greener from afar but just packing your bags and moving away is never a good move.
You should always discuss the idea with an international tax adviser who can determine whether the move is actually in your best interest from a mathematical perspective.
We’ll also be able to help you set up when you arrive, so you know exactly which taxes to pay and how.
For example, you might need to consider the following:
- Tax residency matters: To escape UK taxes, you’ll need to officially change your tax residency. That means spending fewer than 183 days a year in the UK. Don’t try to play both sides – HMRC is sharp when it comes to catching “phantom” residents.
- Capital Gains Tax isn’t that easy to dodge: If you sell UK property after becoming non-resident, you’re still liable for CGT. So, if you’re planning to sell your estate, make sure you know the rules before you hit the ‘market’ button.
- Inheritance Tax lingers: One of the toughest taxes to mitigate, Inheritance Tax follows UK-domiciled individuals wherever they go. So, even if you’ve moved to the sunniest, tax-free haven, you might still be on the hook unless you plan ahead with trusts or gifts.
Don’t forget that many of your destination countries will have their own taxes on income, property, or capital gains.
You’ll need to get familiar with local tax regimes before making your final decision.
Should you stay or go?
The unfortunate truth is that the post-Budget tax landscape in the UK looks a lot less friendly for high-wealth individuals.
The Adam Smith Institute predicts a 20 per cent decline in the number of millionaires in Britain during the current Parliament.
But before you rush for the door, make sure you’ve weighed up the pros and cons.
Moving abroad might save you on taxes, but it comes with its own set of challenges – from navigating new tax systems to restructuring your finances.
As many of your peers look to places like Spain, Portugal, Dubai, and the US, the key takeaway is clear: Britain’s current tax policies are pushing people to rethink where they house their wealth.
If you’re seriously considering relocating, now is the time to get expert tax advice, make a plan, and ensure you’re making the best decision for your financial future.
Whether you stay or go, remember that you can leave Britain behind, but you can’t leave your tax obligations behind as easily.
