Landmark changes in the Budget, introducing the Foreign Income and Gains (FIG) regime and making significant changes to Inheritance Tax and Capital Gains Tax, will likely trigger a “surge in wealth restructuring” for high net worth individuals, says Utmost International.
According to the provider of insurance-based wealth solutions, the Chancellor’s Budget has delivered “both clarity and challenge” to high-net-worth and globally mobile individuals.
Replacing the remittance basis, Foreign Income and Gains (FIG) allows new UK residents with long-term foreign residency to enjoy a four-year tax-free period on overseas income and gains, even when remitted to the UK. For those not eligible for FIG, the temporary repatriation facility offers preferential tax rates on overseas income and gains for up to three years.
Meanwhile, inheritance tax will no longer apply to non-UK assets if an individual has been non-UK resident for at least ten of the last twenty years, although existing trusts have limited “grandfathering” protections, meaning that many high-net-worth individuals may need new strategies for long-term wealth protection, the firm said.
However, new capital gains tax rates and the reduction in allowance from £12,300 to £3,000 will make direct asset holdings more vulnerable to CGT, which could prompt a shift towards more tax-efficiency structures.
Similarly, scrapping the resident non-domicile regime means non-domiciled individuals residing in the UK for more than four years will need to re-evaluate wealth protection strategies, with traditional trusts providing only limited shelter. Utmost International said the change may also spur relocation interest to jurisdictions like Portugal, the UAE, and Monaco,
Brendan Harper, head of high-net worth technical services at Utmost International, said: “The Chancellor’s Autumn Budget has delivered both clarity and challenge to high-net-worth and globally mobile individuals, introducing the Foreign Income and Gains regime and making significant changes to Inheritance Tax and Capital Gains Tax. These reforms mark a clear pivot towards a more demanding UK tax landscape for wealth and investment and underline the importance of maintaining portable, adaptable structures in response to tightening policies.”
Harper said the changes will likely trigger a surge in wealth restructuring, with a heightened focus on tax efficiency and flexibility.
“Wealth advisors can expect a rise in interest for alternative solutions and increased relocation planning as clients look to jurisdictions offering more favourable tax regimes. This Budget is a wake-up call: those affected will need to act swiftly, reassessing and adapting their financial plans to navigate the UK’s evolving tax environment effectively,” he added.
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