The Top 4 Challenges for High Net Worth Individuals Planning to Leave the UK
In an increasingly interconnected financial world, High Net Worth (HNW) and Ultra High Net Worth (UHNW) individuals face ever more complex challenges when it comes to managing and protecting their wealth. For those contemplating leaving the UK, careful planning is required to address key issues relating to tax mitigation and wealth protection.
At Forth Capital, we specialize in guiding HNW and UHNW individuals through these complex transitions, ensuring that assets are safeguarded, and opportunities are identified and realised. In this article, we explore the four most pressing challenges for HNW and UHNW individuals considering leaving the UK.
1. Managing Your Assets and Currency Risk
For individuals moving abroad, currency risk is a key consideration. Fluctuations in exchange rates can significantly affect the value of your UK-based assets. Effective strategies for moving assets offshore, managing the currencies in which investments are held, and maintaining a globally diversified portfolio adaptable to prevailing changes in economic conditions, are critical to the growth and preservation of your wealth when re-locating from the UK.
Interesting Currency Risk Fact - In 2007 you could buy 2.48 Swiss Francs with £1 GBP. Today the currencies are almost on a par. £1 GBP buys 1.11 CHF¹, with the Pound having lost 55% of its value relative to the Swiss Franc.
2. Financial Planning for Cross-Border Tax Mitigation and Compliance
Mitigating tax liabilities across different jurisdictions is one of the most significant challenges facing HNWIs and UHNWIs leaving the UK. Understanding and adhering to both UK tax regulations and foreign tax laws is critical. The UK's tax regime, including Capital Gains Tax (CGT), Inheritance Tax (IHT), and income tax, can create substantial liabilities if not efficiently managed.
Compounding this is the challenge of staying compliant with global regulations such as the Common Reporting Standard (CRS) and the US Foreign Account Tax Compliance Act (FATCA) for example, which require detailed reporting of overseas assets.
Without proper financial planning, HNW and UHNW individuals could face not only significant tax bills but also penalties for non-compliance. Consulting with an experienced international financial planner can help mitigate these risks through strategic planning and the use of legal tax efficiencies.
Interesting CGT Fact - If you sell your business and move to Dubai to negate your CGT liability, but move back to the UK within 5 years, you will be liable for the full amount.
3. Estate and Succession Planning Across Borders
One of the most complex aspects of moving abroad is the impact on estate and succession planning. Different countries have varied inheritance laws, including forced heirship rules that could dictate how your assets are distributed upon death. The UK has specific rules regarding inheritance tax (IHT), and currently IHT applies to your worldwide assets if you are a UK-domiciled individual. This includes your assets held both in the UK and abroad, with the IHT rate of 40% levied on the value of your estate exceeding the £325,000 nil-rate band.
A significant IHT reform² announced in the Autumn 2024 Budget on 30 October and coming into effect on 6 April 2025 means that if you leave the UK and are non-UK tax resident for 10 or more of the previous 20 years, your overseas assets will no longer be subject to IHT. For high net worth and ultra high net worth individuals, this new 'residence-based' IHT regime offers a compelling financial incentive to re-locate, setting the ‘10 year clock’ in motion as soon as possible, and by restructuring your estate to reduce your UK situs assets, effectively minimising your IHT exposure.
Robust cross-border estate planning is required to ensure that you comply with both UK law and the legal requirements of the new jurisdiction you re-locate to, and to ensure a smooth transfer of assets to future generations while minimizing tax liabilities and legal disputes.
Interesting UK IHT Fact - Leaving the UK does not automatically negate your UK IHT exposure, and even under the new residence-based IHT regime, 40% of the value of your UK assets could remain due to HMRC, highlighting the importance of consulting with a dual-qualified international financial planner to restructure your estate.
4. Preserving Pension and Retirement Assets
For those leaving the UK, optimising their retirement assets can be a significant consideration in their financial planning. UK pension schemes, including defined benefit and defined contribution plans, can have significant tax implications when transferred abroad. If not handled correctly, pension transfers can trigger large tax liabilities or reduce the value of your retirement assets.
Solutions such as International Self Invested Personal Pensions and Qualifying Recognised Overseas Pension Schemes (QROPS) offer tax-efficient ways to transfer pensions overseas. At Forth Capital, we help HNW and UHNW individuals explore these options to ensure that their retirement assets are preserved and managed optimally in line with their international move.
Interesting UK Pension Fact - You may have a very generous Defined Benefit UK Pension Scheme, but in the event of your death typically only 50% of the benefits will pass to your spouse.
Making the Complex Simple
Relocating abroad is a significant financial decision that requires expert advice and careful planning. At Forth Capital, we specialise in helping HNW and UHNW individuals navigate these complex challenges, offering tailored financial planning solutions that safeguard wealth across borders. From tax-efficient investment strategies to comprehensive succession planning, our goal is to ensure financial security for you and future generations.
Let us help you secure your financial future, and make the complex simple for you, no matter where in the world you choose to live.
Contact us today or send us an email to schedule an initial consultation.
¹ Source: OFX.com - Correct as at 4 April 2025.
2 HM Treasury Policy Paper - New residence-based regime for inheritance tax - 8 August 2024
This communication is for information purposes only and does not constitute financial, legal, or tax advice. Please schedule a meeting to receive advice on international financial planning and wealth management.
