In brief:
- UK tax for HNW individuals has changed more significantly in the last two years than in the previous several decades.
- The detail of how HNW individuals plan for the UK has changed, but meaningful, effective planning remains available for those who engage with the new rules.
- The core reasons the UK attracts global wealth were never purely tax-driven, and those reasons still hold true today.
- Taken together, the UK remains one of the most compelling jurisdictions for internationally mobile wealth, even as the rules continue to evolve.
A period of unprecedented change
The HNW community and their advisers had perhaps grown somewhat used to a degree of continuity in the UK's tax treatment of international wealth. That continuity shifted materially in 2024, when significant personal tax reforms were introduced following the Autumn Budget 2024.
Over a short period, the UK has abolished the non-dom regime that had stood for over a century, rewritten the inheritance tax (IHT) rules in a way that fundamentally changes how IHT applies to individuals and trusts, including reductions to long-standing IHT reliefs relating to businesses and farms, abolished the protected trusts regime and introduced an entirely new personal tax regime for individuals arriving in the UK.
Since the Autumn Budget 2024, the focus on how the UK should tax private wealth has remained. Although the changes in the Autumn Budget 2025 were more limited in scope, they did for example introduce the "mansion tax" and brought subtle changes to anti-avoidance legislation. As we now approach the Autumn Budget 2026, there continues to be considerable discussion around concepts such as wealth taxes, exit taxes, and increasing CGT rates.
The HNW community has the means to relocate. But a move driven by tax considerations alone is rarely sustainable. What is needed in periods of uncertainty is measured advice that considers the full picture before any decisions are made.
Removal of the remittance basis (the "non-dom regime")
With effect from 6 April 2025, the remittance basis of taxation was abolished. The regime could be claimed by individuals with a non-UK domicile for up to 15 years without having to leave the UK. Individuals claiming the regime were not subject to UK tax on their foreign income and gains, provided they did not bring (remit) them to the UK. This allowed non-UK individuals to come to the UK for extended periods of time, without being subject to UK income tax or capital gains tax (CGT) on their worldwide income and gains.
The remittance basis had its complexities, requiring detailed and specialist advice to remain compliant. Its replacement regime, the Foreign Income and Gains regime (the FIG Regime), represents a significant shift in approach.
The most commonly noted difference between the two regimes is the length of the FIG Regime, at four years compared to the 15 that was available under the remittance basis. The FIG Regime should not, however, be considered the "remittance basis 2.0". It is a new regime with its own distinct framework. What is particularly noteworthy is that the initial four years under the FIG Regime are extremely favourable, indeed more so than the remittance basis. For clients who are coming to the UK for the first time (or for clients who have been out for 10 years), the FIG Regime opens up some genuinely unique planning opportunities.
Inheritance tax reforms
Domicile, which historically determined whether an individual's non-UK situs assets fell within the scope of UK IHT, has been removed as the relevant connecting factor. In its place, the UK has moved to a residence-based test, under which any individual will be within the full scope of IHT where they have been UK tax resident for 10 of the previous 20 tax years (making them a "long-term-resident" (LTR)).
Under the old rules, an individual could often maintain their non-UK domicile for extended periods of time, potentially indefinitely, notwithstanding that they were living in the UK. However, upon reaching 15 years of UK tax residence, an individual would become "UK deemed domiciled" regardless of their actual domicile. In that sense, the new rules have only shortened the position by five years, at least on the surface. The full picture, however, is more significant than a simple five-year shift, and to understand why, it is necessary to look at what has happened to trusts, which is where the old regime's real long-term planning value was found.
Before turning to trusts, however, it is worth noting that a winner of these changes is the UK-domiciled individual living abroad. Under the old rules, it could be challenging for such an individual to demonstrate that they had acquired a domicile of choice outside the UK, particularly if they retained ties to the UK. This meant that many UK-domiciled individuals overseas faced considerable uncertainty as to whether IHT would apply to their worldwide estates. Under the new rules, an individual who has continuously been non-UK tax resident for a sufficient period will fall outside the scope of IHT on their non-UK assets. Moreover, they may even be able to return to the UK for several years before being brought back within scope.
The taxation of trusts
These are among the most significant of the recent changes.
Under the old rules, whilst an individual was non-UK domiciled and provided they had not yet spent 15 years in the UK, with correct planning they could settle non-UK assets into trust and achieve the following outcomes:
- Excluded property trust: non-UK assets in the trust would be protected from IHT indefinitely. This enabled individuals to mitigate the impact of the UK deemed domiciled rule mentioned above; and
- Protected trust: the settlor of the trust would not be subject to income tax or CGT on the income or gains arising within the trust, even where they were a beneficiary of the trust (although they would be taxed if they received a distribution). This in effect allowed HNW individuals to "extend" the benefit of the remittance basis beyond 15 years, by adding all or most of their non-UK assets into an offshore trust shortly before year 15.
Both concepts have now been removed, meaning that once an individual is within the scope of UK tax (4 years for income tax and CGT, 10 years for IHT), a trust will not achieve the same outcomes. This has narrowed the range of scenarios where trusts are efficient for UK tax purposes. There are scenarios where trusts remain the most effective option, in particular where the settlor remains outside the UK but has beneficiaries living in the UK that are benefiting from the trust.
Planning ahead amid speculation
Beyond the substantive changes already enacted, the period preceding each fiscal event has itself become a relevant factor in planning. In advance of recent Budgets, there has been considerable commentary from the press, think tanks and, at times, from within government regarding potential further measures affecting private wealth.
Much of this commentary does not translate into policy. However, its recurrence has practical implications: planning increasingly needs to account not only for the rules as they stand, but also for the prospect of further reform. In practice, this can mean accelerating decisions that might otherwise have been taken at a more measured pace, and structures should be designed with sufficient flexibility to accommodate change.
How to plan for UK tax changes
It would be wrong to assume the tax reforms leave HNW individuals with no room to plan. On the contrary, the new landscape has given rise to a range of planning opportunities:
- for individuals who qualify for the FIG Regime, the initial four years provide unprecedented planning opportunities, particularly if they are anticipating significant liquidity events and can simultaneously cease tax residence in their home country;
- IHT planning strategies have opened up to UK-domiciled individuals living overseas in ways that were previously not available, including the ability to establish trusts for the benefit of family still based in the UK;
corporate structures are increasingly being considered as alternatives to trusts, such as family investment companies or family limited partnerships; and
- the benefits of favourable double tax treaties are being explored more than ever, where previously advisers may not have had to consider them due to the remittance basis.
The practical implication for HNW individuals and their advisers is that static planning is no longer viable. Structures need to be reviewed regularly, built with flexibility in mind, and stress-tested against the possibility of further reform rather than designed solely around the rules in force today.
Why the UK still matters
Notwithstanding the planning opportunities outlined above, the scale of these changes naturally raises the question of whether the UK has become a less attractive place for HNW individuals to live. That has not been our experience. What has changed is not whether clients want to be here, but how they plan for it.
The reasons for that endurance are, for the most part, not tax reasons at all. HNW families continue to value the UK's world-class education, institutional stability, independent courts and reliable legal system, deep and sophisticated professional advisory ecosystem, and the quality of life, cultural richness and connectivity that London and the wider UK offer. Families thinking in generational terms tend to place particular weight on the UK's schools and universities, on a judiciary and rule of law that have evolved over centuries rather than been assembled to attract capital, and on a concentration of tax, legal and wealth planning expertise that few other jurisdictions can match at the same depth.
When viewed against a backdrop of conflict and political uncertainty in other parts of the world, these qualities matter more, not less. Tax rules can, and evidently do, change; institutional stability, legal certainty and quality of life are harder to replicate elsewhere, and far more difficult to rebuild once lost. It is this combination, rather than any single tax advantage, that continues to make the UK a jurisdiction where HNW families choose to live, invest and, increasingly, call home.
How Mishcon de Reya can help
The recent changes to the UK's tax framework for internationally mobile individuals and families require careful, forward-looking planning. Our Private Wealth and Tax team advises on all aspects of the new regime, including the FIG regime, inheritance tax exposure, trust and wealth structuring, succession planning and cross-border tax considerations. We work closely with individuals, families and family offices to review existing arrangements, identify planning opportunities and create flexible structures that remain effective as the rules continue to evolve.