Britain’s super rich rush to protect wealth ahead of UK election

Mr Sunak’s wife, Akshata Murty, was revealed in 2022 to benefit from non-dom status. After a media storm, Mrs Murty said she would pay UK taxes on her global earnings, partly derived from Indian software giant Infosys

British prime minister Rishi Sunak surprised the country by calling a summer election.

Wealthy people in the UK, from foreign billionaires to City of London bankers, are rushing to shelter their money after British prime minister Rishi Sunak surprised the country by calling a summer election.

Some are cashing in investments, paying off bills that may soon rise or leaving the UK entirely, according to interviews with more than two dozen high-net-worth individuals, who asked not to be named, and wealth advisers.

The ruling Conservatives and the opposition Labour Party have both pledged to scrap preferential tax treatment for non-domiciled residents — rich foreigners living in the UK, also known as non-doms. Labour leader Keir Starmer has additional plans to tax the wealthy and polls show his party more than 20 points ahead.

“I have had previously hesitating clients go into panic mode,” David Lesperance, a Poland-based tax and immigration adviser for the ultra-rich, said on Mr Sunak calling the July 4 vote. 

He “pulled the pin on the election grenade”. The UK was expected to lose a net 3,200 high-net-worth individuals last year, the most in Europe and double 2022’s level, citizenship advisory firm Henley & Partners estimated. 

Britain’s reputation for legal and political stability has been rocked by the upheaval of Brexit and the chop-and-change of five different Tory prime ministers since 2016.

As well as losing ground to popular territories for the well-heeled such as Monaco, Dubai and Switzerland, it has also had to compete with European neighbours like Italy and Greece, which rolled out programs to lure wealthy foreigners. The UK scrapped its so-called golden visa program in 2022.

“It will be a serious, and entirely avoidable, mis-step if these changes proceed as announced,” Dominic Lawrance, a London-based partner at global law firm Charles Russell Speechlys.

Labour also wants to add taxes on private equity professionals and private school fees. As part of its non-dom proposal, it aims to remove inheritance tax exemptions for overseas assets held in trust structures. The idea of this major change has helped push up the price of insurance to cover possible levies on wealthy estates.

Non-dom status dates back to 1799, when it was introduced to protect colonial investments. Recent notable non-doms include former HSBC chief executive Stuart Gulliver and one-time Conservative Party deputy chairman Michael Ashcroft.

Mr Sunak’s wife, Akshata Murty, was also revealed in 2022 to benefit from the status. After a media storm, Mrs Murty said she would pay UK taxes on her global earnings, partly derived from Indian software giant Infosys.

Labour leaders have previously estimated they can raise about £3bn (€3.5bn) from scrapping the regime, echoing recent academic research that predicted fewer than 100 wealthy foreigners with the status would subsequently leave the nation.

The number of non-doms is already declining, falling by almost half to 68,800 in the decade to 2022, partly through an earlier change in the rules to stop individuals using the benefit permanently. Still, those retaining the status pay more than £8bn in British taxes a year, according to latest official data.

One City law firm has received more than three dozen enquiries related to non-dom changes in the past few months, ranging from multibillionaires to centi-millionaires, according to people familiar with the matter. One individual has now left for Switzerland, while another is preparing to move to Italy, the people said, who asked not to be identified as the details are private.

- Bloomberg