With the Autumn Budget on 28 October fast approaching and a new Chancellor settling into Number 11, there is a familiar knot in the stomachs of many internationally mobile families. But this is now part of something bigger: a sustained shift in how wealthy families think about the UK. This article considers this change and what it means for those considering a life beyond the UK.
The non-dom regime as we knew it is gone. Since April 2025, the new four-year foreign income and gains (FIG) regime has replaced the remittance basis, and the residence-based inheritance tax rules have redrawn the map for long-term UK residents. For families who have called the UK home for a generation or more, the arithmetic has fundamentally changed.
We are now, remarkably, on our fourth wave of departures. The first came in the run-up to April 2025, as families sought to get ahead of the non-dom abolition. The second followed the changes to business property relief in 2026, which caught many family business owners off guard. The third is already building around the pension reforms due in 2027. And now, with a new Prime Minister and fresh Budget rumours, from wealth taxes to exit taxes to the alignment of CGT with income tax rates, a fourth wave is gathering pace.
This is not just a UK phenomenon. As observed by many in the industry, the impulse to diversify away from a single government or region has spread from developing countries to the western world at an unprecedented rate. Once a magnet for wealthy families and their investments, the UK is now seeing an increasing number choose to leave. Brexit and successive rounds of tax reform have, together, fundamentally altered the proposition.
The tax landscape: where things stand
The headline changes are by now well-trodden ground, but they bear repeating for anyone still weighing up their options.
- Income and capital gains. The FIG regime offers a four-year window of relief for individuals arriving to the UK. But for those who have been UK resident beyond that period, worldwide income and gains are now fully within the UK tax net.
- Inheritance tax. The shift to a residence-based IHT regime means that individuals who have been UK resident for 10 out of the previous 20 tax years are now exposed to IHT on their worldwide estates. Crucially, this "tail" follows you out of the door; even after leaving the UK, the charge can persist for up to 10 years. Timing your departure has never been more important.
Trust protections. The historical protections afforded to excluded property trusts have been significantly curtailed. Assets settled by non-doms before April 2025 are no longer shielded in the way many families had planned for. Restructuring is essential but must be approached with care.
The psychology of leaving
What strikes us most in our conversations with those considering a departure from the UK is that the decision is rarely about any single tax change. It is the cumulative weight of uncertainty that often tips the balance. The UK's competitive position as a destination for international wealth is not determined by tax rates alone; it is shaped by the sense that the rules of the game are stable and fair. When that sense erodes, as it has been doing, confidence goes with it.
For many families, having a “plan B” is about "future-proofing": thinking carefully about what global access they want for their family, especially the children, in the decades ahead. For many of the families we advise, the psychology is similar. They want to know the exit is there, even if they hope never to use it.
The tax mechanics of leaving
Getting the timing and structure of a departure wrong can be extremely costly. The statutory residence test (SRT) is the starting point for managing a departure. The SRT determines whether you are UK tax resident for a given year, and its detailed rules around day-counting, ties to the UK and sufficient presence mean that the line between resident and non-resident is often finer than families expect.
Crucially, the default position is that you are either resident or non-resident for an entire tax year. The circumstances in which you can split a tax year (becoming non-resident part way through) are very limited, and the qualifying conditions are strict. This makes the timing of a departure critical: leave too late in the tax year or fail to meet the split-year criteria and you may find yourself taxed as a UK resident for the full year in which you depart.
Equally important is the question of where tax residence will be acquired. It may not always be enough simply to leave the UK; families must also consider whether they will become tax resident in their chosen destination, and when. Some jurisdictions have their own day-counting rules, while others look at domicile or habitual abode. The interaction between the UK’s SRT and the destination country’s residence rules can produce unexpected results, including, in some cases, dual residence. Treaty tie-breaker provisions may resolve the position, but they do not always work in the taxpayer’s favour, and the practical implications of getting this wrong can be significant. Equally, the operation of the rules may produce some positive side effects, including a period of time where an individual is not tax resident anywhere and so presenting a planning opportunity.
Families must also think beyond their own personal tax residence. Companies, trusts and other structures in which the family hold interests each have their own residence rules, which turn on factors such as where central management and control is exercised, where trustees are resident and where decisions are made. Restructuring the governance and decision-making of family entities is an essential, and often underestimated, part of the departure planning.
Finally, families should be alive to the temporary non-residence rules. These anti-avoidance provisions are designed to catch individuals who leave the UK for a short period, realise gains or extract income while non-resident, and then return. If UK residence is resumed within five complete years of departure, certain income and gains realised during the period of non-residence can be brought back into the charge to UK tax. The rules are broad and can apply to capital gains, certain pension withdrawals and distributions from close companies, among other things. For families who may wish to keep the door open for a return, understanding these rules, as well as the rules on resetting the inheritance tax clock, is crucial.
Practical considerations: more than a tax exercise
Leaving the UK is, of course, about far more than tax. For families with children in British schools, elderly parents, business interests or deep social roots, the decision is layered and deeply personal. Below are some of the key non-tax issues we see clients grappling with.
- Children and education. Families with children under 18 face particular complexity, especially where parents may be separated or where one parent wishes to remain in the UK. Court permission may be required to relocate a child, and the family courts will always prioritise the child's welfare. The disruption to schooling and friendships is a real and often significant consideration.
- Immigration status. Whilst residence and immigration planning often focuses on ensuring there are sufficient rights to live and work in the destination country, the effect of departure on the existing UK immigration status should not be forgotten. For example, for those holding a UK residence status or indefinite leave to remain, the implications of extended absence must be carefully mapped. Losing the right to return to the UK or missing out on the ability to apply for British citizenship can be an unwelcome surprise.
- Succession planning. A move abroad is an opportune moment to revisit Wills, powers of attorney and family governance structures. Different jurisdictions have different succession rules and what works under English law may not hold up in the new location.
Ongoing UK connections. HMRC's statutory residence test is notoriously technical and maintaining too many ties to the UK can undermine a claim to non-residence. The devil is in the detail, and careful management and record-keeping are essential.
Our advice: don't wait for the Autumn leaves to fall
For families seriously considering a move, our strong advice is to begin planning now. The lead time for a well-executed departure which covers tax, immigration, family law, property and succession is typically at least four months and can be considerably longer, depending on the new location.
Equally, not everyone who takes advice will leave. For some families, the value lies simply in understanding the rules and the options available to them. There is something to be said for feeling in control of your own outcomes, rather than being subject to changes imposed upon you. Even if the conclusion is to stay, the process of planning can be empowering in itself.
But it's not all one-way traffic
For all the headlines about wealthy families heading for the exit, it is important to remember that this is not a one-directional story. The UK continues to attract international families, drawn by its world-class education system, legal infrastructure, cultural richness and position as a global financial centre. London, in particular, remains one of the most desirable cities in the world in which to live and do business.
Perhaps most encouragingly, many of the families we are advising on their departure are not closing the door behind them. They are leaving for now. A significant number tell us they would seriously consider returning if the tax and political landscape were to stabilise or, better yet, if a future government were to recognise the value that internationally mobile families bring to the UK economy and craft a regime designed to attract them.
*For further information, please contact Katya Vagner (kvagner@fladgate.com) or Victoria Brewer (vbrewer@fladgate.com).*
