Exodus from the UK: Increasing Numbers Leaving

The trend of high-net-worth individuals (HNWIs) leaving the UK is accelerating.

The Henley Private Wealth Migration Report by Henley & Partners published before the general election indicates that the UK is set to lose 9,500 millionaires in 2024, more than any country except China. This number is more than double that of 2023 and reflects an 8% decline in the number of UK millionaires over the past decade. In contrast, countries like Germany and the US have seen increases of 15% and 62%, respectively.

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Swiss investment bank UBS published its research just days after Sir Keir Starmer’s landslide victory and forecasts that the number of UK millionaires is expected to shrink by 17% between 2023 and 2028. The Netherlands is the only other country expected to post a decline, although its drop is much smaller at 4%. By contrast, countries like Taiwan, Indonesia and Thailand are among those with the sharpest rises.

The projection comes as high earners based in the UK fear a series of new wealth taxes under Labour, alongside a renewed crackdown on non-doms.

However, Paul Donovan, chief economist at UBS Global, said the reasons for the drop went beyond just higher taxes.

Donovan said “There is a case of push and pull. Sanctions against Russia have caused a shift in population over time in this particular group. The non-dom status shift that the Conservative government implemented has had a small effect. And the non-indigenous millionaire population, which is constantly shifting, will be looking for low-tax locations all of the time. That is a function of pull factors in other countries like Dubai or Singapore.”

UBS expect Japan, France and Germany to overtake the UK by 2028.

The Exodus of the Entrepreneurial class

Beyond millionaires, there is a significant concern about the exodus of middle-class individuals, including the self-employed, SME business owners, and retired business owners. These groups hold substantial equity in their homes, savings, and pension pots, and are vital to the UK economy and society. The SME (Small-Medium Enterprise) sector, in particular, is the engine of economic growth and employment in the UK.

The SME sector

According to the FSB (Federation of Small Businesses), SMEs account for 99.9% of the business population with a total of 5.6 million businesses; account for 61% (16.7 million) of total employment, 53% (￡2.4 trillion) of turnover in the UK private sector and 25% of total UK GDP.

Impact of the General Election

The recent general election is expected to accelerate this exodus from the UK. While the Labour Party has presented itself as pro-business and focused on wealth creation, its manifesto includes plans to close tax loopholes benefiting the wealthy. According to the Institute of Fiscal Studies (IFS), the wealthiest 1% currently contribute 27% of all UK income tax, and changes in tax policy may push more HNWIs to relocate.

Non-Dom Tax Regime

The UK's non-domiciled (non-dom) tax regime has been a significant source of revenue, contributing ￡8.9 billion in the 2023 tax year. However, both the Conservative and Labour parties have pledged to clamp down on this regime, which may drive more HNWIs to leave the UK. Wealth advisors warn that up to a third of non-doms might leave the UK if Labour implements its proposed tax changes.

Repercussions for Government Revenue

The departure of HNWIs is likely to impact government tax receipts significantly. HMRC data shows that the amount of income tax, capital gains tax, and NICs paid by non-doms rose by ￡474 million in the previous year, with the average non-dom paying over ￡120,000 in tax. The number of non-dom taxpayers increased by 7%, reaching roughly 74,000 by the end of the 2023 tax year.

Alternative Destinations

Wealthy individuals are considering other countries such as Monaco, the UAE, Switzerland, Portugal and Italy due to more favourable tax regimes. Ever popular destinations for those moving from the UK include Australia, Canada, New Zealand, and South Africa.

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Importance of Financial Planning

For those deciding to emigrate, sound financial advice from a qualified and regulated financial advisor or wealth manager is crucial.

Currency Exchange Solutions

When the time comes to look at converting your Pound Sterling funds to whichever currency you will need for wherever you decide to start your new life, securing the best exchange rate at an optimum time in a secure way that meets your unique criteria is an essential step to not only protect your wealth but give you peace of mind.

Conclusion

Stay tuned each week for detailed insights and practical advice on navigating the complexities of relocating from the UK, ensuring your financial planning and currency exchange needs are met with expertise and personalized service.

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