Why the wealthy are flooding back to the UK
22nd August 2025
Posted in Articles, IHT by Andrew Marr
You may have looked twice at this title because a truer statement is perhaps that the wealthy are leaving the UK in droves as they are sick of being used as cash cows for the huge deficit. We have done this subject to death (and yes, the wealthy are still leaving in droves) and so I wanted to share a reason why some people may actually want to come to the UK.
There are two useful UK tax rules that new arrivers should be paying attention to:
The FIG regime
Individuals who have clocked up at least 10 consecutive years of non-tax residence will not have a UK tax liability in respect of foreign income and gains for their first four years of UK tax residence. This relief must be claimed in their tax returns.
Outside the UK inheritance tax (IHT) net
Individuals are now only fully within the UK IHT net once they have been UK resident for ten out of the last 20 years. This effectively means that anyone who has been non-UK resident for ten consecutive years will only fully be within the charge to UK IHT after ten years of UK residence. It is worth recapping here that UK situs assets are always within the UK IHT net.
Bringing the rules together
This is best illustrated by an example;
Example
Bert and Mabel return to the UK on 6 April 2026 after 11 years away. They have £10m of offshore assets with inherent gains of £4m. They can gift these assets to their children before 6 April 2030 without triggering a UK taxable gain (subject to claiming the FIG regime). Furthermore, because the offshore assets are not within the scope of UK IHT (and won’t be until 6 April 2036), when gifted, any gifted assets will escape UK IHT immediately without Bert and Mabel needing to survive seven years.
In the above case Bert and Mabel may want to consider selling the offshore assets to an offshore company. This would allow them to hold onto their asset base beyond the four-year FIG period and they can then consider assigning these receivables (amounts owed to them by the company) to their children during the ten-year period when non-UK assets are outside the UK IHT net (a receivable from an offshore company would generally be considered a non-UK situs asset for IHT). Various complicated anti-avoidance legislation would need to be considered here.
Forbes Dawson view
With all the ‘tax misery’ currently doing the rounds, many people may be put off relocating to the UK and expats may be put off returning. Given that capital gains tax is often a big obstacle to effective IHT planning (which often involves making gifts which trigger capital gains tax), the FIG regime coupled with a ten year ‘IHT holiday’ can help to facilitate some very effective IHT planning. Clearly, taxpayers will not just need to think about the UK but will also need to be mindful of IHT and capital gains tax implications in the jurisdiction they have left or the place where their assets are located. Could the UK be seen as a new tax haven country for certain individuals?
