If you are a High-net-worth individual (HNWI) who is contemplating relocating to the UK and perhaps even settling here, there are a wide range of immigration and tax planning strategies that you can adopt to make the journey as easy as possible while enhancing your wealth management. In this blog, we will look at the main UK visa options for HNWIs, tax strategies including the non-domicile tax status, inheritance tax planning, financial compliance, and how you can best ensure your long-term wealth preservation.
Introduction to UK visa routes and tax advantages for HNWIs
The UK offers two key immigration routes for overseas HNWIs that lead to permanent settlement while offering tax advantages. The main visa routes that wealthy individuals often consider include:
Self-Sponsorsed route UK
Self-sponsorship is a relatively new and innovative immigration route that allows HNWI to sponsor themselves by setting up a business in the UK. It also enables HNWIs to gain UK permanent residency without the need for traditional employment sponsorship. AY&J is one of the leaders in this route and can help you make a successful application as soon as possible. Under the self-sponsorship route, HNWIs can benefit from the UK’s favourable corporation tax system and the option to offset taxes by investing in company assets (e.g. the annual investment allowance).
Innovator Founder visa
The Innovator Founder visa is ideal for entrepreneurs from overseas who have an idea for a new, unique, viable, and innovative business idea for the UK. If you choose this route, you will need to have your business plan endorsed by an approved endorsing body. While its focus is on innovation, this visa also serves as a gateway for HNWIs looking to take advantage of the UK’s business ecosystem while benefitting from favourable tax policies.
Under this route, HNWIs can benefit from the UK’s corporation tax and dividend tax regime rather than paying normal income tax through employment. In addition, they can lower their tax obligations through existing HMRC schemes such as the annual investment allowance.
In addition to the above two immigration routes, other pathways are available, such as the Expansion Worker visa, which allows overseas businesses to set up a wholly owned branch or subsidiary in the UK.
Non-Domicile Tax Status: What HNWIs need to know about tax residency in the UK
Non-domiciled (non-dom) tax status is one of the most significant tax advantages available to HNWIs relocating to the UK. Under UK tax law, an individual can be a UK resident for tax purposes but claim ‘non-dom’ status, which means they do not have to pay UK tax on their foreign income or gains, provided those assets are not brought into the UK (known as the ‘remittance basis’). It is important to note that the non-dom regime is to be abolished from 6th April 2025.
What is the new residence status based tax regime from 2025?
Starting from 6th April 2025, the remittance basis tax regime will be replaced with a new system based on residence status. This new regime will apply for up to four years, beginning either from 6th April 2025 or from the first tax year when the person becomes a UK resident, whichever is later. During this time, foreign income and gains (FIG) can be transferred to the UK without triggering tax. However, those opting for this four-year scheme will lose access to personal allowances and the CGT annual exemption.
The new regime will only be available to those who have been non-UK residents for at least the previous ten tax years. However, qualifying individuals who have been UK tax residents for fewer than four tax years as of 6th April 2025 can continue to use the FIG regime for the remainder of the four-year period. After this initial four-year term, individuals will be taxed on their global income and gains under the standard UK tax rules for residents.
Non-dom inheritance tax (IHT)
Under the existing rules, non-doms can reduce their liability for UK inheritance tax (IHT) to UK-based assets only. This assumes that they maintain their non-dom status and are considered to be domiciled after residing in the UK for 15 out of the past 20 tax years. Deaths occurring before 6th April 2025 will be subject to the current rules.
New rules will come into force from 6th April 2025, from which point there will be a new test for whether a person has been a UK resident for 10 tax years prior to the year of the ‘chargeable event’. If you meet the 10-year test, you then remain within the ‘UK IHT net’ for the next 10 years whether you are resident in the UK or not.
Inheritance Tax Planning: Protecting Family Wealth Across Generations
Inheritance tax (IHT) is a major concern for many HNWIs, given that the IHT rate is 40% on estates valued above £325,000. With careful planning, you can put in place tax strategies to minimise your IHT liability and protect your family’s wealth.
Strategies to minimise inheritance tax
Many HNWIs seeking to minimise their IHT liabilities set up a trust. A trust of the correct type for your needs will remove assets1 from your estate, potentially reducing your IHT burden considerably. Trusts can be particularly useful for transferring wealth to the next generation, ensuring assets are protected and managed in accordance with family objectives.
Another popular way to reduce IHT is to set up a family office. Family offices provide HNWIs with a way of managing their investments, succession planning, and legal structures to minimise tax exposure while ensuring a smooth transfer of wealth.
This article only covers the surface of the many IHT-reducing approaches available to HNWIs. For advice based on the latest rules, please speak to an HNWI financial advisor in the UK who can advise you based on your unique circumstances.
Navigating UK financial regulations for investors – Ensuring compliance for HNWIs and their investments
The UK has a very strict financial regulation regime designed to prevent money laundering, tax evasion, and financial crime. Compliance with these regulations is essential to avoid legal issues and potential penalties. HNWIs must ensure their investments comply with the UK’s AML regulations. This involves providing detailed information and documentation which proves that the ultimate source of funds is legitimate.
Beyond the money laundering rules, the UK requires strict transparency in financial matters, including reporting foreign assets and income under the Common Reporting Standard (CRS). HNWIs with global investments need to ensure they disclose the necessary information to HMRC.
By working with advisors experienced in UK financial regulations, HNWIs can ensure compliance while making the most of the UK tax benefits for high-net-worth individuals. Proper planning will help avoid potential pitfalls and penalties associated with non-compliance.
Legacy and estate planning – Key considerations for long-term wealth preservation
Wealth preservation over generations requires more than just tax efficiency; it also demands a strategic approach to legacy planning in the UK and UK estate planning for HNWIs. For HNWIs, this involves not only reducing tax exposure but also ensuring the smooth transfer of assets to heirs in a way that aligns with family values and objectives.
It is important to implement a well-considered estate planning strategy to make sure that your wealth is passed down efficiently and in a way that maximises the benefits for future generations. You can achieve this in a number of ways, including gifting assets during your lifetime to reduce the size of your taxable estate and lower your IHT liability. It is also important to have in place a clear succession plan to prevent disputes and ensure that assets are managed according to your wishes. This is especially important for those with complex, international estates.
Many HNWIs also include charitable giving within their estate planning approach because donations to registered UK charities are exempt from IHT and can also reduce the overall tax burden of their estate.
Final words
With careful planning, you can relocate to the UK and maximise your wealth while protecting your financial future both now and for future generations. We recommend finding a trusted expert in financial and estate planning who you can work with from day one of your journey to the UK, providing guidance on tax planning for HNWIs. Doing so will ensure that you can stay within the current and upcoming tax rules. It is also important to engage an immigration Solicitor who can handle the immigration application process on behalf of you and your family members, allowing you to focus on other matters such as setting up your business and investments in the UK.
A Y & J Solicitors is a specialist immigration law firm with extensive experience with all types of visa applications. We have an in-depth understanding of immigration law and are professional and results-focused. For assistance with your visa application or any other UK immigration law concerns, please contact us on +44 20 7404 7933 or contact us today. We’re here to help!
