The UK is experiencing a significant outflow of wealth under the new Foreign Income and Gains (FIG) regime, despite opportunistic buyers from the UAE and some long-term British expats returning to purchase prime London property, according to Utmost Wealth Solutions.
The FIG regime, introduced this year, offers individuals four years free of UK tax on overseas income and gains, alongside 10 years of inheritance tax (IHT) exemption.
While this has encouraged some older high-net-worth (HNW) expats to consider moving back to the UK to be closer to family, the broader trend is one of capital flight.
The comments come after the Financial Times reported a wave of demand for London property from UAE investors and UK expats seeking to make the most of the FIG regime.
Marc Acheson, global wealth specialist at Utmost Wealth Solutions, said: “While some HNW expats may return home, this is far from the prevailing trend.
“Typically, the expats that are looking to return are those that are more elderly and wish and need to be nearer family.
“For this cohort, the new FIG regime is attractive as they have four years tax free on overseas income and gains and are IHT exempt for 10 years.”
He added: “Although recent data on the number of HNWs and non-doms that have already left the UK has come under scrutiny, the feeling on the ground is that vast amounts of wealth have already left and is leaving the UK.
“We believe the OBR projections of 25% of non-doms with trusts leaving may be conservative and those leaving are extremely wealthy.
“With speculation mounting as to what further taxes the Chancellor may introduce at the Autumn Budget to plug the fiscal hole, the UK’s reputation as a competitive and attractive jurisdiction for wealth will continue to be at risk.
“As a result, we are likely to see far more wealth exit the UK than arrive including UK domiciled individuals who can be exempt from IHT after 10 years of non-UK residency.”
