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For immediate release: London, 22 October 2024

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Most of the approximately 9,500 high-net-worth individuals (HNWIs) forecast to leave the UK this year are expected to head to the EU, which is set to enjoy an influx of +6,500 millionaires from Britain by the end of December. The UAE will welcome the next biggest cohort of wealthy individuals and their families fleeing the UK (+800 HNWIs), followed by the US (+720), Australasia (+300), and the Caribbean Islands in 5^th place, with +250 millionaires making a permanent move to their sun-drenched tropical shores.

In a follow-up to the 2024 Henley Wealth Migration Dashboard, leading international investment migration advisory firm Henley & Partners has teamed up with wealth intelligence firm New World Wealth to publish their latest forecast and review the potential impact of the upcoming budget on UK wealth migration trends.

Based on data collected over the past nine months, the UK’s wealth exodus or WEXIT is expected to include 85 centi-millionaires and 10 billionaires. In an ironic reversal of Brexit fortunes, 68% are heading for Europe, with their favored destinations being Italy, Malta, Greece, Portugal, Switzerland, Monaco, Cyprus, France, Spain, and the Netherlands.

Note: For our purposes ‘millionaires’ or ‘HNWIs’ refer to individuals with liquid investable wealth of USD 1 million or more, and ‘centi-millionaires’ refers to individuals with liquid investable wealth of USD 100 million or more.

The large number of centi-millionaires leaving the UK is particularly concerning, according to New World Wealth’s Head of Research, Andrew Amoils, who expects over 10% of the UK’s centi-millionaires to exit the country this year. “Over 60% of centi-millionaires are entrepreneurs and company founders, which makes them key when it comes to wealth creation. The businesses they start up have a significant positive spillover effect on the middle class as they create large numbers of well-paying jobs in their base country. It is also worth noting that most of the companies on the FTSE 100 were started by individuals who went on to become centi-millionaires.”

Record surge in UK investment migration applications reflects growing concerns

The total number of applications for investment migration programs from UK nationals received by Henley & Partners has risen by an astonishing 337% in the last five years (2019 versus 2023 totals). The international firm, which has assisted clients from over 80 different nationalities so far this year, says that in a stunning change of circumstances, Brits have risen from 20^th place on its client source market list in 2018 to 4^th place in terms of global demand for alternative residence and citizenship options in 2024.

As Stuart Wakeling, head of Henley & Partners’ UK office points out, “the last two quarters have both been record-breaking, with a 160% increase in applications by UK-based investors for residence and citizenship by investment programs over the last six months (April to September 2024) compared to the previous six months (October 2023 to March 2024). In terms of enquiries, by the end of September 2024 we had already exceeded the total for 2023 by 27%, and across our 60 offices worldwide, out of the clients representing 200-plus different nationalities who have reached out to us this year alone, Brits account for the 4^th highest number of enquiries.”

The UK’s high tax rates and concerns about additional tax hikes that could be announced at the end of the month in the Labour Party’s first budget in 14 years, are highlighted as being among the main reasons for the wealth exodus. Wakeling says looking at the wealth migration data, “it’s clear that next year’s increase in tax for non-domiciled individuals, announced by the previous Conservative government in March, prompted people to start considering leaving, and this had a domino effect on UK nationals when they realized that capital gains and inheritance tax were the last ones remaining that could possibly be changed and make a difference to the budget shortfall.”

Amoils agrees and points out that the UK’s capital gains tax and estate duty rates are among the highest in the world. “What many politicians and academics in the UK fail to understand is that there are several high-income countries globally that don’t levy capital gains tax, including the likes of Singapore, the UAE, and even New Zealand. There is also a much longer list of countries that don’t charge estate duty, including high-growth markets such as Canada, Australia, and Malta. In the new global world, these countries are all attractive migration options for English-speaking entrepreneurs. It is also worth noting that although the US charges a similar estate duty rate (40%) to the UK, the threshold there is much higher, which means only the super-rich need to pay it, whereas in the UK even upper-middle class individuals are pulled into it.”

Upcoming tax and wealth management conference to address UK’s financial migration

Henley & Partners will be hosting an inaugural investment and tax migration conference in London on 12 November, bringing together industry and other independent experts to unpack the 30 October budget announcement and provide insights on tax planning, global mobility, and residence options.

Peter Ferrigno, Director of Tax Services at Henley & Partners, who will be speaking at the event, points out that by promising not to increase income tax or VAT, the new Labour government has limited its ability to raise new revenues. “Inheritance tax is at a 40% rate and applies to estates above GBP 325,000, which is very high by global standards. However, as there is no gift tax, it has long been common practice to put assets into trust and plan in advance, as gifts made just before death count as part of the estate, but those made more than three years before have a lower rate, falling to zero after seven years. Where the assets are still under the control of the original owner, we expect increasing restrictions on whether the transfer is effective for tax purposes or not, but it’s too early to say.”

As regards the government’s commitment to take action in respect of the ‘carried interest’ loophole, Ferrigno says “the original plan for carried interest was for it to be taxable as income rather than at capital gains tax rates of 18% and 28%, as there is a feeling that in many cases it’s really a bonus rather than a gain on an asset investment. However, the latest thinking is that taxing it at the full rate of income tax would drive a large chunk of the industry away, so we expect some change, but not to all the way.”

The London-based conference, entitled ‘Should I Stay or Should I Go’ after the well-known hit single by The Clash, will also focus on another tax proposal grabbing the headlines in the UK: to charge VAT on private school fees. Tess Wilkinson, Director of Education Services at Henley & Partners, warns that the tax could make private education 20% more expensive. “International schools in other countries are already less expensive, and many offer a British curriculum. Education in the UK is big business, bringing in over GBP 16.5 billion and supporting over 328,000 jobs annually. Combined with other possible tax hikes, pricier private school fees present a very different landscape for high-net-worth families based in the UK, with fewer incentives to remain in Britain over competitive jurisdictions such as Singapore, Switzerland, or the USA.”

Ends.

Notes to Editors:

It should be noted that despite their importance, taxes are by no means the only driver of the ongoing exodus of millionaires out of the UK. Other economic and finance-related reasons include:

• The impact of Brexit on financial markets and general business opportunities in the UK.
• Failure to recover from the 2008 financial crisis. Britain has been one of the worst-performing economies in the world since the crisis, when measured in USD terms, with total private wealth held in the country down by -10% since its 2007 pre-crisis peak (in USD). The UK’s GDP per capita (in USD) is also down -3% over this period, which compares very poorly to the US (+70%) and the world (+52%) – see link. It is worth noting that back in 2007, the UK had a higher GDP per capita than the US but now it ranks well behind.
• The UK’s main equity index (the FTSE 100) has also performed poorly since the 2008 financial crisis and is down by -23% since 2007, when measured in USD terms. This compares very poorly to positive growth of +228% in the S&P 500 and +101% in the MSCI World Index over the same period.
• The growing dominance of the US and Asia in the global hi-tech space has caused several wealthy tech entrepreneurs in the UK to reconsider their base location, with many moving to tech hubs in North America and Europe. Brexit has arguably exacerbated this trend.
• The dwindling importance of the London Stock Exchange (LSE). The LSE was once the world’s largest stock market by market cap but now ranks 11^th globally. Its performance over the past two decades has been particularly poor, with a large number of delistings and relatively few new IPOs. The FTSE 100 has also performed poorly, as mentioned earlier.

Wealth versus GDP:

We consider wealth to be a far better measure of the financial health of an economy than GDP. The reasons for this include:

• In many countries, a large portion of GDP flows to government and therefore has little to no impact on private wealth creation.
• GDP counts items multiple times. For instance, if someone is paid USD 100 for a product or a service and they then pay someone else that same USD 100 for another product or service, USD 200 will be added to the country’s GDP despite the fact that only USD 100 was produced at the start.
• GDP largely overlooks the impact of property and stock market moves, yet these two factors clearly have a significant impact on wealth creation.
• GDP is a relatively static measure that tends to move only slightly year on year. It also has a time lag.

Wealth figures, on the other hand, have none of these limitations, making them a far more accurate gauge of the true financial health of an economy than its GDP figures.

You can find our full methodology here and read our recent study on why millionaire migration matters here.