Citywealth Quick Insight Series on Tax Trends – Richard Pott, Buzzacott
This week’s Citywealth Quick Insight Series on Tax Trends is dedicated to Richard Pott, Senior Manager at Buzzacott.
How would you summarize the current global tax environment for UHNW individuals and families? Are there particular jurisdictions that are becoming more (or less) attractive?
The global tax climate is becoming more competitive than ever, particularly following recent changes we have seen in the UK – most notably the abolition of the domicile regime, which has prompted some individuals to leave the UK.
- Dubai remains a popular option, offering no income tax or CGT.
- Cyprus offers 0% tax on foreign dividends and interest for non-domiciled residents, has along with a flexible 60-day tax residency rule and no inheritance tax.
- One of our client’s opted to move to Italy, a decision accelerated by the LTR rules coming into effect for IHT purposes, with the flat-tax regime for new arrivals also a contributing factor.
- Portugal was a former favourite, but its Non-Habitual Resident (NHR) regime has now closed to new applicants.
- The wealth taxes in Spain, France, and Norway generally make these less attractive options for clients considering leaving the UK.
From the discussions we have had with clients, while the loss of the remittance basis for income tax purposes and the switch to long term residence for inheritance tax purposes have been the main driving forces behind their departures from the UK, the increased reporting obligations for those with a broad range of income-producing assets have also been a factor. We have seen a number of entrepreneurs who are about to have a liquidity event increasingly taking at the option of going non-UK resident, since if they remain non-UK resident for ten years, the FIG regime will be available on their return. Naturally, their stage of life and family circumstances have had a large bearing on the decisions made. There is not currently enough data to gauge the long-term impact, and by the time there is, the damage to the economy may already have been done.
While the UK may be seeming less attractive for many individuals, for companies the UK remains an attractive option, with the 25% CT rate (19% under £50,000). The use of transfer pricing arrangements to shift profits made in the UK to a lower tax jurisdiction, or to where tax reliefs are available, does impact the UK economy, and a number of cases have been highlighted in the media where government contracts have been awarded but the tax paid on the profit in the UK has been a lot lower than might be expected. Whether we will see any rule changes affecting companies remains to be seen.
What recent tax policy changes in key regions—such as the U.S., UK, EU, or Asia—do you believe have the most significant implications for global wealth structuring?
Certainly from a UK perspective, the abolition of domicile for tax purposes is one of the biggest changes, but the IHT changes in relation to BPR and APR, plus pensions coming into the scope of IHT from April 2027, are also causing clients to revisit their options. We have seen several clients take the decision to leave the UK and we anticipate this continuing. Many new clients coming to us for advice have this in mind as an option. The UK’s FIG regime, and the trade agreements currently being negotiated, still make the UK an attractive destination – both for those arriving for the first time and for those returning after a period of 10 years’ non-residence. Only time will tell whether the long-term benefits to the UK will materialise.
Generally, and not just in the UK, there is a focus on transparency, and the scrutiny applied to traditional structures is making planning more difficult. This is creating a need to revisit existing structures in terms of their efficacy. The tax authorities now have greater access to financial data under Common Reporting Standard (CRS) and beneficial ownership registries.
One example of changes in other jurisdictions is the increase in the Italian annual substitute tax on foreign-source income to €300,000 for those moving from 1 January 2026 onwards who are looking to benefit from the non-dom flat tax regime. This has increased from €200,000 for those who established tax residence in Italy between 11 August 2024 and 31 December 2025, and from €100,000 for those who moved prior to August 2024.
What are the emerging cross-border tax challenges facing wealthy international families today?
We see a lot of clients looking to move out of the UK to realise significant gains during a period of non- residence. Provided they manage their affairs within the parameters of the rules surrounding temporary non-residence, this remains an effective method of removing exposure to UK CGT on such disposals. This could be an area the government may look to tackle, perhaps with a change to the TNR rules or maybe an exit tax. The loss of such entrepreneurship from the UK is less than desirable and is a key area the government may choose to consider.
There is a greater level of global tax transparency now than ever, and the changes that have been introduced mean that previous advice and structuring require a health check, particularly in terms of the relevant anti-avoidance rules. The changes to the treatment of trusts, which now turns on the residence position of the settlor, has impacted heavily on previous structuring, changing how foreign income and gains are attributed and taxed for settlors, beneficiaries, and trustees.
Most UHNWs live between more than one jurisdiction, so a key aspect is carefully monitoring the time spent in each and how this impacts on their tax position. There can often be a mismatch in the rules between jurisdictions, which may require some planning to ensure these do not lead to double taxation or losing out on relevant reliefs
The new wealth taxes introduced in some jurisdictions such as France, Spain, and Norway need to be considered, as do any gift taxes, as there are no UK equivalents.
As a firm we can cover the UK and US tax angles, and we have firms we work with in other jurisdictions through the association we are part of.
Another key consideration for clients will be whether they feel the taxes they pay offer value for money. For example, Scandinavian countries have some of the highest tax rates in the world, but they also are perceived to have some of the best public services in the world, meaning their tax regime is considered good by comparison. In the UK, this calculus is under scrutiny too – amid speculation about a possible death tax to fund social care reforms, the Prime Minister has suggested that better use could be made of current funding levels rather than raising further revenue. How clients weigh the broader benefits of living in the UK against what they pay in tax will remain a key factor when making decisions impacting their tax residence.
How are advisors helping clients prepare for increased transparency, disclosure rules (like CRS and FATCA), and information-sharing regimes?
As advisors, our role in helping clients is to keep up to date with the reporting requirements, to ensure accurate and timely reporting, taking this administrative burden away from clients and ensuring they remain compliant. In a climate of increasing transparency, there is nowhere to hide, and it is more important than ever to ensure nothing is missed. HMRC is introducing ever-increasing powers to put the onus of proof on the taxpayer rather than on HMRC, and we see that in some of the changes planned for Finance Bill 2027 and the requirement to correct.
In what ways are philanthropic structures and charitable giving being shaped by evolving tax legislation and public policy?
The Autumn 2025 Budget brought in changes in terms of how the Charity exemption for IHT applies. The exemption is now restricted to gifts made directly to UK charities and community amateur sports clubs. Any gifts to trusts which do not fall within this definition, such as a charitable trust established in the will, are no longer exempted. This is aligned with the rules in respect of gift aid relief for income tax purposes.
Donor-Advised Funds (DAFs) are growing in popularity as they offer immediate income tax savings while allowing the individual to invest and distribute funds over a period of time.
What role do tax-efficient investments (e.g., private placement life insurance, real estate, etc.) play in your clients’ strategies, and are these evolving?
We are seeing a rise in clients looking to setup Family Investment Companies (FICs) as part of succession and estate planning. This structuring can be effective in passing future growth to other family members, whilst still retaining a degree of control via the creation of two share classes, one with voting rights, held by the founder, and the other with the economic entitlement, normally held by the founder’s children.
Life cover is also covered as an option within any estate planning. Provided the policy is written in trust, payouts on death will not be subject to IHT, and if cover is taken at a relatively young age, lower premiums can be locked in. For some clients a single premium life insurance policy can be a good choice; these are funded by an upfront lump-sum payment, as opposed to ongoing monthly or annual premiums. They provide lifetime coverage without the commitment to ongoing premiums, but they do require a larger upfront capital commitment. However, the guaranteed death benefit and tax-free growth are other key benefits. With the forthcoming pension changes for IHT purposes, these may become a more attractive option than adding to pension savings, particularly with access to pensions savings moving to the age of 57 from April 2028.
We see many clients investing in EIS-qualifying companies. Where they subscribe for new shares, they are able to benefit from the 30% tax reducer and have the option to claim deferral relief for CGT purposes. Any gains on such shares are also exempt, provided they have been held three years or longer. Any EIS shares held at death will generally qualify for business property relief (BPR) at up to 100%, for IHT purposes. They are however risky by nature.
AIM shares will attract BPR at 50% for IHT purposes, but as with EIS, they are high risk.
As with all investment decisions, the importance of independent financial advice cannot be underestimated particularly where higher-risk assets such as EIS and AIM shares are being considered.
How is succession and estate planning being impacted by new inheritance, wealth, or exit tax proposals globally?
The change from domicile to LTR is driving more clients to consider leaving the UK sooner than they may have previously thought. particularly where they were deemed domiciled, as the “tail” for removing exposure to UK IHT on non-UK assets is now longer, at up to 10 years.
Although the limits on Agricultural Property Relief (APR) and Business Property Relief (BPR) are now greater at £2.5m per individual (opposed to the £1m originally announced), with transferability between spouses where unused, this will still leave some with an exposure where there was none previously, without lifetime planning.
The pulling of pension savings into the scope of UK IHT from April 2027 will impact nearly everyone, and this will also have an impact on the availability of the Residence Nil Rate Band, with the tapering which applies to death estates over £2m. There is some lifetime planning which may be considered in this regard, but the increase in the age at which pension savings may be accessed, to 57 from April 2028, will also need to be kept in mind.
It also has to be noted that nil rate bands remain frozen, while asset values increase.
The IHT equivalent in any jurisdiction and the treaty position, along with any wealth taxes. will need to be considered carefully as part of any advice.
Are you seeing increased interest in alternative jurisdictions, citizenship or residency-by-investment programs due to tax considerations?
Yes, with the shift away from the domicile regime, the UK is no longer as attractive for expats considering relocating there. Most individuals are instead looking at European countries offering Golden Visas, including Greece, Italy, and Malta.
There are also estate tax treaties to consider in relation to some jurisdictions, namely the United States, France, Italy, India, Pakistan, the Republic of Ireland, the Netherlands, South Africa, Sweden, and Switzerland.
How are tax authorities using digital tools, AI, and data analytics to enhance enforcement—and how should advisors respond?
HMRC uses AI to interrogate data sources and even to monitor social media activity in order to pick out taxpayers to investigate. Their systems look at data including their own, banks and other financial institutions, the Land Registry, the DWP, and Companies house.
Alongside the global sharing exchanges, such as CRS, these tools make it easier to interrogate systems and identify potential non-reporting.
We are seeing a lack of thought on HMRC’s part with some of the enquiries they are opening, and at times it can seem that their systems are generating letters with little or no human input. It is more important than ever for us as advisers to ensure the accuracy of the reporting we assist our clients with, to reduce the potential of discovery of non-reporting or misreporting.
Looking forward, what are your top predictions or concerns about the future direction of global tax policy for UHNW clients over the next 12–24 months?
Increased scrutiny by HMRC, under sharing exchanges such as CRS and with increased AI capabilities, will make it much easier for HMRC to pick up any non-reporting. Accurate reporting and compliance will be more crucial than ever.
Draft legislation in respect of HMRC’s new measure to modernise the correction of errors via a duty to correct has now been issued. This imposes a statutory duty to correct which was already implicit in the existing legislation. The new rules also introduce Customer Correction Notices (CCNs) which may be issued by HMRC where they have reason to suspect an inaccuracy, requiring taxpayers to respond by correcting an inaccuracy, making a disclosure, or confirming no correction is required. This is not too dissimilar to the nudge letters currently used by HMRC. Where a taxpayer fails to correct under the new rules, this could see HMRC looking to treat this as a deliberate omission. This will lead to harsher penalties, with behaviour which may currently be considered careless re-categorised to deliberate, which would also allow HMRC to increase the timeframe they may go back in raising assessments to 20 years, whereas the limits are otherwise 4 years if reasonable care was taken and 6 years if the omission is considered careless.
In the UK, the Prime Minister has committed to funding social care; although he has also suggested that current funding levels could be put to better use – leaving speculation that this could be funded by a so-called death tax. If introduced, this could create liabilities for many who currently have no IHT exposure at all.
The increases in wealth taxes in other jurisdictions highlight this as a key trend, and the High Value Council Tax Surcharge is already due to come into effect from April 2028. Could we see more in the UK in future? Time will tell.
One message is clear, while we remain in a climate of ever-changing tax rules, taking advice and revisiting and refreshing existing advice is imperative.
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