Insights from Howard Bilton: Navigating the Shifting Landscape for UHNW Clients in 2024 and Beyond
Howard Bilton, Chairman of The Sovereign Group, shares his expert perspectives on the evolving priorities and challenges faced by ultra-high-net-worth (UHNW) clients. From tax minimisation and mobility to succession planning and family governance, Bilton provides a deep dive into how UHNW individuals are adapting to changing global regulations and fiscal environments.
What are UHNW clients’ biggest priorities and concerns and how do you see that changing?
UHNW clients have always been interested in security, asset protection, tax minimisation and dynastic planning. What we have been seeing for some time is that these clients have become increasingly mobile as it has become easy to run a business and their personal affairs from anywhere in the world utilising the internet. Covid taught everybody that meetings are not necessary other than on Zoom/Teams or similar and that you can run everything very efficiently from anywhere in the world.
Relocation is less of a barrier than ever before and UHNWs are becoming increasingly willing to relocate if circumstances suggest it would be advantageous or sensible to do so.
A prime example is the recent changes to UK taxation which means that those who were non-domiciled in the UK will now be fully taxable there after a period of tax residency. This includes them having to pay inheritance tax at 40% on their worldwide estates. All of these clients, in our experience, will be relocating. They may have been willing to pay the income and capital gains tax at the usual UK rates (although most took the view that this was not the deal they were offered which enticed them to the UK in the first place) but none of them are willing to have their whole estates taxed at 40% on death.
It is relatively easy for these clients to rearrange their affairs so that they are no longer tax resident in the UK and therefore they will pay no tax in the UK going forward. Most of them have multiple homes and they will just adjust their time so that they spend less than the maximum allowable days in the UK which would make them tax resident.
The policy of the UK government seems shortsighted. HMRCs figures on their website suggest that these non-doms pay, on average, some of the highest levels of income tax in the UK even though a lot of their income may be exempt from taxation. And each time taxation on the non-doms has been raised it has resulted in less tax being collected. When the UK government first levied the £30,000 on non-doms the total tax take went down. It went down again when the levy was raised from £30,000 to £50,000. It seemed inconceivable that now they are making them fully chargeable that the tax take would increase. The figures quoted that the new regime would raise £2 billion extra tax per year was contingent on all of these non-doms would stay. That is extremely optimistic. It was impossible for HMRC to anticipate how many would stay and how many would leave but advisors could have told them that very few will stay. And so it is proving.
