High taxes are deterring the wealthy from the UK - where are the rich relocating to?

Record numbers of millionaires are set to flee the UK this year due to high taxes and the end of non-dom status, regardless of who is in power, research suggests.

Wealthy UK households have been hit by frozen tax thresholds as well as falling capital gains and dividend allowances, hitting how much they can keep from their income and investment gains.

This is already prompting many to leave the UK for more tax-friendly shores even before the general election result, according to Henley & Partners, which advises wealthy individuals on investing for citizenship and residency.

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Its analysis found that the UK is expected to see an unprecedented net loss of 9,500 millionaires in 2024 - second only to China worldwide and more than double the 4,200 who left the country last year.

Analysis by Henley & Partners also suggests 128,000 millionaires are expected to relocate worldwide this year, eclipsing the previous record of 120,000 set in 2023. 

“As the world grapples with a perfect storm of geopolitical tensions, economic uncertainty, and social upheaval, millionaires are voting with their feet in record numbers,” says Dominic Volek, group head of private clients at Henley & Partners.

“2024 is shaping up to be a watershed moment in the global migration of wealth. In many respects, this great millionaire migration is a leading indicator, signalling a profound shift in the global landscape and the tectonic plates of wealth and power, with far-reaching implications for the future trajectory of the nations they leave behind or those which they make their new home.”

Why are millionaires leaving the UK?

The UK tax burden is at record levels, making living in the country less appealing to those with lots of wealth.

Frozen tax thresholds have created fiscal drag, hitting people’s earnings.

People earning above £125,140, face a 45% income tax rate, while the personal allowance is reduced by £1 for every £2 you earn above £100,000.

Meanwhile, those who take income from dividends have seen the allowance cut from £1,000 to £500 since April 2024, while it was £5,000 when first introduced in 2016.

Capital gains allowances have also halved since April to £3,000.

Both the Conservative Party and Labour have pledged to scrap non-dom status, while those who want to invest in areas such as property from overseas face higher stamp duty rates.

There are also additional worries about Labour adding VAT to private school fees and there are concerns that it may raise capital gains tax.

Where are the rich relocating to?

While the UK’s tax take may be on the rise, there are plenty of locations looking to attract wealthy individuals with so-called golden visas in return for investment in government projects as well as businesses or residential developments.

The most popular location currently is the United Arab Emirates (UAE), including Dubai, according to Henley & Partners.

Residents benefit from zero income tax as well as a luxury lifestyle. The UAE is poised to welcome a record net inflow of 6,700 millionaires this year alone, including Brits.

The UAE lets people apply for its golden residence visa by either buying a property worth a minimum of AED 2 million (approximately $550,000), either in cash or through a loan from specific local banks.

There is also an option to purchase property off-plan through approved real estate companies.

“The evolution and development of the UAE’s wealth management ecosystem is unprecedented,” says Sinita Singh-Dalal, partner leading the private wealth and family offices at Hourani.

“In less than 5 years, the UAE has introduced a robust regulatory framework that provides the wealthy with a range of innovative solutions to protect, preserve and enhance their wealth.”

Other top destinations for migrating millionaires include the USA, with Florida attracting expats, as well as Singapore, Canada and Australia.

The US has an immigrant investor programme where it provides residency to those who put $1,050,000 into a non-targeted employment area project or $800,000 into a targeted employment area project in a rural area or an area with high unemployment. 

Alternatively, there is also a scheme for those who create or preserve 10 permanent full-time jobs for qualified USA workers.

Singapore has an investment for residency programme to back either a Singapore Economic Development Board fund, new companies or to establish a family office in the country.

You can get Canadian residency by setting up a business or raising money through an angel investment or a venture capital fund.

Meanwhile, rather than seeking investment, Australia welcomes prominent and internationally-recognised talent from certain sectors such as energy, defence, financial services and education.

“The countries with the greatest growth in high-net-worth individuals continue to be those who have prioritised policies designed to entice millionaires to their shores,” adds Volek.

“Nine of the Top 10 countries attracting the most millionaires in 2024 have formal investment migration programs and actively encourage foreign direct investment in return for residence or citizenship rights.”