Tax Reform Turmoil: Global Shake-Up Raises Questions for Trustees, Families, and Philanthropists

Date: 09 Apr 2025

Karen Jones

Join the debate: In-person – 13^th May – The Citywealth Forum. 

Sweeping changes to international tax regimes are triggering alarm among private clients, trustees, and legal advisors, with experts warning that hastily conceived reforms may lead to unintended consequences, costly litigation, and a fundamental rethink of estate and trust planning. From the UK’s overhaul of non-dom rules to complex cross-border trust taxation and estate challenges, the landscape is becoming increasingly fraught. As lawmakers pursue ambitious policy shifts, critics say the emphasis on theory over practicality risks alienating high-net-worth individuals and undermining long-term confidence in Britain’s competitiveness.

Along with this the intersection of politics and wealth has long been a subject of scrutiny, but in a year marked by pivotal elections in both the United States and the United Kingdom, the decisions made in Westminster and Washington are resonating across borders in a very personal way for the world’s ultra-high-net-worth (UHNW) individuals. Amid fears of wealth taxation, changes to Non-Domiciled (Non-Dom) tax regimes, and broader political uncertainty, a growing number of affluent individuals are re-evaluating where they live, work, and invest. 

Complex Rules, Unintended Consequences

At the heart of the current uncertainty lies a web of tax reforms widely perceived as rushed and reactionary. Speaking at a recent Citywealth Forum editorial meeting and an upcoming panellist for the Citywealth Forum on 13th May, Michael Lewis of EY and Trevor Egan of Buzzacott highlighted the risks of legislation designed with insufficient foresight.

“The government is running a live experiment—and the collateral damage could be significant.”
– Michael Lewis, EY

“Significant tax changes are being pushed through without clarity on their long-term impact,” said Lewis. “In many ways, it’s a live experiment—one that could cause serious collateral damage.”

The 2007 non-dom reforms were cited as a cautionary tale, where legislative missteps led to inconsistencies and loopholes. A similar fate, critics argue, may await the UK’s updated trust taxation rules and the controversial ten-year charges now applied to foreign trusts.

“Inheritance Tax is no longer a peripheral issue. It’s becoming a major revenue generator.”, 

– Trevor Egan, Buzzacott and Citywealth Forum panellist

Trustees in the Firing Line

Meanwhile, legal experts report a marked rise in litigation involving trustees, particularly among second- and third-generation beneficiaries. As family structures become more complex, the duties—and liabilities—of trustees are increasingly under scrutiny.

“Disputes often arise when a trustee acts without proper consultation or fails to seek tax advice,” said James Dickinson of Dickinson Gleeson who will also be speaking on the 13th May. “The courts are asking whether trustees are truly impartial—and whether they’re fulfilling their duties to all beneficiaries.”

Global Perception and the Flight of Capital

Underlying the entire debate is the perception—fair or not—that the UK is no longer “open for business.” With the non-dom shake-up prompting an exodus of wealthy residents, some fear Britain’s competitive edge is waning.

“Thousands have left,” David Goepel, Edwin Coe and Forum panellist noted. “It’s not just the number—it’s the calibre of people. These are innovators, investors, wealth creators.”

The government’s new Four-Year FIG regime may attract short-term movers, particularly Americans seeking to avoid New York or California taxes. But the jury is out on whether it offers the long-term stability globally mobile individuals seek. Goepel added. “Stability matters more than short-term incentives.”

The Philanthropic Pivot

As trust structures face more scrutiny, many families are turning to philanthropy as a strategic and meaningful outlet. But even here, evolving expectations are reshaping the field.

“Next-gen philanthropists are less tax-motivated and more impact-driven,” said Julie Hutchison of LGT Wealth Management who is also a panellist. “They want to know their money is making a tangible difference—and quickly.”

Structures such as Donor Advised Funds (DAFs) are growing in popularity, though critics argue they can sometimes obscure accountability. Meanwhile, new vehicles like non-charitable LLCs are enabling donors to back causes outside traditional frameworks, including activism and climate policy.

Peter Goddard of IMG Trust, Cayman, Forum speaker, offered a caution: “We’re seeing a surge in collaborative giving—but this must come with proper governance and infrastructure. A great cause is only effective if the charity can deliver.”

Migration Trends: A Wealth Exodus or Strategic Relocation?

Migration patterns among UHNW individuals are undergoing a transformation. One of the panel noted that while outbound movement from the UK is “very apparent,” there’s also a notable influx from the US, driven by perceptions of the UK as a relatively low-tax environment.

However, destinations like Italy, Israel, and the UAE are gaining traction. Italy’s 15-year flat tax regime, despite recent fee hikes, remains a draw. Israel, though facing regional tensions, continues to attract its diaspora, and Dubai’s tax-neutral, lifestyle-driven offering is fast becoming a go-to for permanent relocation.

Unlike temporary European incentives, Dubai offers no defined endpoint — a feature that appeals to those seeking long-term certainty. “If ties to the UK aren’t strong, what’s the incentive to come back?” one panellist said.

The broader concern remains consistency. “Clients hate uncertainty,” says another panellist. “They fear the rules will change—and then change again.”

Trusts and Succession: Planning for Longevity and Governance

As lifespans lengthen, so too does the complexity of administering long-standing trust structures. In some cases, protectors or trustees have become incapacitated or unreachable, halting key decisions and throwing administrative duties into disarray.

Maxine Bodden Robinson of IMG Trust Company, Forum speaker raised the issue of outdated trust provisions, many of which failed to account for declining capacity. “These clauses were often included without much thought,” she noted, “and now trustees are facing real-world consequences.”

The debate around the role and liability of protectors is intensifying. Are they overseers, decision-makers, or somewhere in between? Trusts have become more institutionalised, and many family members now shy away from assuming fiduciary responsibilities due to legal risks. The rise of professional protectors — often from trust companies or legal firms — is seen as a necessary evolution, though not without its complexities.

Switzerland, meanwhile, is pivoting toward foundation law rather than updating its trust legislation, while implementing new licensing requirements for trustees managing more than £5 million in assets.

For families, trustees, and advisors, the message is clear: stay informed, be proactive, and prepare for a turbulent road ahead.

Citywealth Forum – JOIN THE DEBATE – IN PERSON

See the full panel and agenda here: https://www.citywealthmag.com/citywealth-forum-agenda/

Date: Tuesday, 13 May 2025

Time: 8:30 AM – 5:30 PM – Penny Mordaunt keynote speaker from 4.45-5.30pm

Drinks: 5.30pm-8.30pm with attendees of the Magic Circle Awards, also receiving an invite

Venue: The Skyline London
100 Minories, London, EC3N 1JY, United Kingdom

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• Tax Reform Turmoil: Global Shake-Up for Trustees, Families & Philanthropists
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• UK Taxation: Not So Bad After All
• Dubai – Where East Meets West (Tax Planning for UHNW Relocation)
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