Expatriation Tax Planning for HNW Citizens Leaving the UK Permanently 

The UK is witnessing an unprecedented exodus of wealthy individuals amid escalating fears over the new Labour government’s tax policies.

Since Prime Minister Keir Starmer took office in mid-2024, fears of rising tax burdens have driven a surge in the number of high-net-worth individuals (HNWIs) leaving the country.

Sweeping changes to capital gains taxation, property levies and business regulations have led many investors, entrepreneurs and even families to reassess their financial future in the UK.

In 2024 alone, an estimated 10,800 millionaires departed Britain – a staggering 157% increase from the previous year – raising serious questions about the UK’s economic competitiveness.

While new millionaires will continue to be created in the United Kingdom, even more will leave due to bad tax, economic and social policies.

When they do, they’re likely to be hit by a fresh Labour plan to impose an exit tax. 

This year is critical for HNWIs in the UK: it’s never been more important to stay abreast of current events and be prepared to act quickly and accurately.

For those exact reasons, the Nomad Capitalist team has put together this primer on the tax changes and your options to escape the success-loathing left. 

Why is UK Labour Targeting the Wealthy?

According to British journalist and political commentator Simon Heffer, the new government appears determined to spend excessive amounts of money it doesn’t have on what he calls ‘undeserving client groups from public sector workers, trade unions and others’, mainly because of class belligerence.

Despite a growing economy, a ‘black hole’ in the UK’s public finances, to the tune of £22 billion, is to be filled by raising all kinds of taxes on the wealthy. 

Critics warn that Chancellor Rachel Reeves’ economic policies are a danger to Britain and will lead to less revenue, arguing that, quite simply, Reeves’ policies are designed to crush the rich rather than improve the UK. 

Labour claims to be keeping its promise of not increasing income tax but is intent on raising taxes, which it believes will only affect the rich.

But as more and more millionaires exit the UK permanently, the government there is set to find out the true cost of pursuing the wealthy.

The Pros and Cons of Leaving the UK

Before discussing Labour’s tax reforms in detail, it worth looking at what’s at stake for those who are considering packing their bags?

Some of the advantages of remaining in the UK include:

• A stable but softening jobs market
• A stable but increasing rate of inflation (currently around 3%)
• A skilled, educated workforce
• Free medical treatment through the National Health Service (NHS)
• A diverse culture and population.

On the flip side, the negatives include:

• High rates of personal and corporate income tax 
• Tax hikes on capital gains, inheritances, property and private school fees
• Lack of freedom, excessive surveillance and government overreach
• Declining living standards and increasing crime rates
• A National Health Service which seems constantly on the verge of being overwhelmed
• Issues with poorly managed migration
• Anti-competitive measures introduced by Labour.

The UK’s New Taxes

Even before it came to power, Labour signalled its intention to abolish the UK’s non-domicile tax regime. 

That intention was made official policy in Labour’s first ‘tax-and-spend’ budget, published in late 2024.

The changes will come into effect this tax year on April 6, 2025, when the current rules for the taxation of non-UK-domiciled individuals end.

Before these planned changes, individuals who claimed non-dom status (typically wealthy foreigners with a domicile elsewhere) didn’t have to pay tax in the UK on their non-UK income or capital gains.

But with its new plan, Labour slammed the door shut on a century-old exemption that allowed wealthy foreign residents to avoid tax on their overseas income in return for living, creating jobs and investing in the UK. 

A number of other measures impose onerous new tax measures on businesses, property owners and employers. They include: 

• Capital gains tax (CGT) increasing on most assets to 18% from 10% at the lower rate and to 24% from 20% for higher earners
• An extension until 2030 on the threshold for paying inheritance tax
• Plans to bring inherited pensions into inheritance tax from 2027
• Limits on tax relief for companies and farms to £1 million.

 From April 2025, firms’ national insurance contributions will increase by 1.2 percentage points to 15% – a change that could potentially hurt wages and hiring.

In addition, the threshold at which businesses start paying social contributions on each worker’s salary has been reduced from £9,100 per year to £5,000.

As if all that weren’t enough, Labour plans to introduce VAT on private school fees, a tax increase that further exemplifies its anti-capitalist, anti-wealth fiscal policies.

The unintended consequences of these measures could see the UK further lose its competitive edge, turn away investment and even inflame social division.

What Happens to Your Assets When Leaving the UK?

If you’re thinking about leaving the United Kingdom, have you considered what will happen to your assets when you do so?

Will there be an impact on your Individual Savings Account (ISA), your pension, your property, investments and even your crypto and gold?

Under the UK statutory residency test, if you spend more than 183 days in the UK in a tax year, you remain a UK tax resident. 

Once you leave the UK permanently, you become a UK non-resident and are taxed only on UK-sourced income, with some exceptions. 

 In this case, your existing ISAs remain tax-free in the UK if you’ve not sold your investments and taken the money with you. 

ISA contributions are only permitted if you’re a UK resident or eligible crown employee. However, if you leave the UK, some countries do not recognise the tax-free status of the ISA.

Income and gains might be taxable locally during the tax year. For example, the special tax treatment afforded to ISAs in the UK is not recognised in the same way in the United States, Australia, Canada, Germany and France. 

Consequently, any income and gains could be subject to local taxation. 

In jurisdictions with little or no personal income tax, even if the ISA tax exemption isn’t formally recognised, the tax treatment might still result in no tax on your ISA earnings.

Your UK pensions continue to grow tax-free. When you withdraw the benefit, tax rules differ if you’re a UK resident versus a non-resident. 

Typically, up to 25% can be taken as a tax-free lump sum. If you’re leaving permanently, you really need to consider transferring to a Qualifying Recognised Overseas Pension Scheme (QROPS). But be aware of transfer fees.

Essentially, these are overseas pension schemes that meet the specific requirements set by His Majesty’s Revenue and Customs (HMRC) in the UK. 

This allows individuals who have accumulated UK pension savings to transfer their pension funds to an overseas scheme permanently when they retire abroad. 

Depending on where you go, double taxation treaties may prevent you from being taxed twice on your pension income. 

Capital gains, dividends and interest are taxed under standard UK rules when you leave the UK. 

If you’re deemed a UK resident for tax purposes for even part of the year you will likely be taxed on your worldwide gains. As a non-resident, you’re generally taxed only on UK-sourced income. 

Let’s say you’ve got Bitcoin, for example. 

In the UK, realised gains are subject to capital gains tax, while UK non-residents may not face CGT on crypto trades unless the gains are considered to be UK-sourced. 

However, your new country of residence may decide to tax crypto transactions as part of your worldwide income. 

Gold is treated similarly to other capital assets and is subject to capital gains tax upon sale. 

In terms of property, if you live in the UK, your principal private residence (PPR) may be eligible for relief, exempting you from capital gains tax on the sale of your property.

However, if you’re leaving the United Kingdom to live abroad permanently, and you know the property will cease to become your main home, you might lose some or all of that PPR relief, especially if you convert it into a rental property and you’re generating rental income. 

In addition, if your new country taxes capital gains, double taxation treaties may help mitigate the impact. It’s vital to consult a tax professional to understand how much tax you pay and how these rules apply to your personal situation. 

Any rental income earned from your UK property will be subject to UK tax, with non-resident landlords having to comply with HMRC’s non-resident landlord scheme. 

If you sell a UK property as a non-resident, you’re liable for UK capital gains tax on any gains you make from that sale. Rental income or gains from selling your property may be taxable from the UK and your new country of residence. 

Again, double taxation agreements between the UK and your destination can help prevent paying tax twice on the same income or gains. 

Someone spending 183 days in the UK and remaining a UK tax resident will be subject to standard taxation on their pensions, assets and property based on UK tax rules. 

For example, if you live part of the year in Portugal, you might also have taxation rights on the income you generate, depending on your residency status. 

The lesson here is that you need to coordinate tax filings, understand the UK’s and your chosen country’s tax rules, and make use of double taxation treaties to avoid paying tax twice. 

On the other hand, if you’re leaving the United Kingdom, you would be a non-resident for UK tax purposes and only be liable for UK taxes on your UK-sourced income.

If you have an online business registered in the UK or generate UK-sourced income, its profits might continue to be subject to UK taxation. 

However, if you relocate your business to a tax-friendly country, you could lower or even eliminate your corporate tax liability.

This depends on the legal structure of the business and the extent to which its income is considered UK-sourced.

Historically, the UK has not had an exit tax for capital gains because, as an EU member state, free movement rules prevented it. 

When the UK left the European Union, any obstacle to implementing an effective exit tax was removed. 

From April 2025, long-term UK residents who leave and cease to satisfy the residency tests could be exposed to an exit tax of up to 6%, although only on funds in settled UK-based trusts.

UK Expatriation: FAQs

Planning to Leave the UK Permanently? 

The issue for many UK taxpayers is that when these big tax changes come, they may not be able to leave fast enough. 

This has happened before, particularly with Americans who want to renounce their US citizenship.

The bottom line is that you need to consider exiting the UK tax system before these changes take effect and that means becoming a tax resident somewhere else. 

The fewer assets you have in the UK, the easier it is to leave and move abroad when the train derails. Record numbers of millionaires already believe that time is now. 

Planning is essential as you consider using a second residence or citizenship as your escape route, protecting your assets and minimising the tax consequences.  

A record-breaking number of high-net-worth individuals have already decided to leave the UK and ‘go where they’re treated best’. If you want to join them and leave the UK permanently, don’t wait until things get worse.

Reach out to Nomad Capitalist and let us help you go where you’re treated best.