The UK is set to experience a major exodus of high-net-worth individuals (HNWIs) this year, with an estimated 9,500 millionaires expected to leave the country by the end of December. Most of these HNWIs are heading for Europe, with the European Union anticipated to gain around 6,500 of Britain’s wealthy emigrants. Other popular destinations include the United Arab Emirates, which is forecast to welcome 800 HNWIs, followed by the US, Australasia, and the Caribbean.
This wealth migration trend, dubbed “WEXIT,” has been detailed in the latest forecast by Henley & Partners, an international advisory firm, and New World Wealth, ahead of next week’s UK budget. The report follows the 2024 Henley Wealth Migration Dashboard and indicates that 85 centi-millionaires and 10 billionaires will leave the UK this year, with 68% of them expected to relocate to Europe. Popular European destinations for these wealthy individuals include Italy, Malta, Greece, Portugal, Switzerland, Monaco, Cyprus, France, Spain, and the Netherlands.
Stuart Wakeling, a senior executive at Henley & Partners’ UK office, said that applications for investment migration programmes by UK-based investors have surged in recent months. “The last two quarters have been record-breaking, with a 160% increase in applications over the last six months compared to the previous period. In 2018, UK citizens ranked 20th in our global client source list. This year, they’ve climbed to 4th place.”
One of the main reasons behind this exodus is the UK’s high tax burden, with the potential for more tax increases in the future. The looming Labour budget, the first in 14 years, is expected to raise concerns further among the wealthy. According to Andrew Amoils, Head of Research at New World Wealth, the UK’s capital gains tax and inheritance tax rates are among the highest globally. “What many politicians in the UK don’t seem to recognise is that there are numerous countries, including Singapore, the UAE, and New Zealand, that don’t levy capital gains tax. Additionally, there’s a growing list of nations, such as Canada, Australia, and Malta, that don’t charge estate duties either.”
The UK’s capital gains tax and inheritance tax have been key drivers of this migration. Inheritance tax currently stands at 40% on estates worth more than £325,000, a figure considered high by international standards. This has prompted many wealthy individuals to seek more tax-friendly environments abroad.
Peter Ferrigno, Director of Tax Services at Henley & Partners, noted that the new government’s pledge not to raise income tax or VAT has left limited avenues to generate new revenue. “With inheritance tax rates so high and restrictions tightening on how assets can be transferred tax-free, we expect the situation to worsen. While there may be some adjustments to the ‘carried interest’ loophole, fully taxing it at the standard income tax rate could lead to significant departures from the financial services sector.”
As the UK government prepares for its budget announcement, the migration of the country’s wealthiest citizens to more favourable tax jurisdictions show no signs of slowing down.
