The UK’s evolving tax landscape is prompting a growing number of High Net Worth (HNW) and Ultra High Net Worth (UHNW) individuals to relocate from the UK to more tax-favourable jurisdictions. This has been prompted, at least in part, by the sweeping changes announced in relation to Inheritance Tax, non-UK domiciled individuals’ tax positions and carried interest rules in the October 2024 budget.
As we write this, the UK is 15 days away from the 2025 Autumn budget announcement. Indeed by the time the article is published, the budget will have been delivered, and we shall be busily reviewing the detailed notes and technical papers that tend to closely follow it. Whilst we cannot therefore comment with any certainty on the contents, recent press reports have been fervent with rumours of manifesto pledges being broken through income tax rate increases, changes to capital gains tax, the imposition of wealth taxes, exit taxes and mansion taxes (to name just a few.) With a large gap in the public finances requiring tax rises reported to be to the tune of around £30bn, and with no clear view to reduce state spending, we expect a bumpy road ahead.
How many individuals have to date left the UK in light of past changes, together with the increasing uncertainty over what is still to come, cannot be precisely quantified. There have been some well publicised and high-profile individuals who have departed, and one might imagine the true number is significantly higher than the figure of 77 non-doms that the current government used as a basis when piecing together the major changes announced in the October 2024 budget.
In some respects, the actual content of the upcoming budget is a moot point for a number of HNWs/UHNWs. The seemingly continuous cycle of swirling uncertainty and perceived ‘crack down’ on individual wealth is enough for some to prompt their own exit considerations.
Welcomed with open arms? The Jersey and Guernsey positions
Jersey and Guernsey are recognised as prime jurisdictions for HNW/UHNWs to relocate to. The appeal lies not only in the favourable tax regimes, which include no capital gains tax, inheritance tax or wealth tax (not to mention any mansion nor exit taxes) but also in their political stability, robust legal frameworks, and sophisticated financial and professional services sectors.
Both islands offer competitive personal income tax rates and a high standard of living, making them attractive destinations for individuals seeking both tax efficiency and lifestyle quality. For those departing the UK, the islands provide a familiar yet distinct environment, with strong ties and travel links to the UK, but with independent tax and legal systems.
We are currently seeing unprecedented demand from HNW/UHNWs looking to relocate to the islands. We expect this trend to continue, including for individuals who may be claiming the UK’s 4-year Foreign Income and Gains (“FIG”) exemption and may be nearing the end of that 4 year window, making their non-UK income and gains available to the UK exchequer. Individuals who have been in the UK for a few years may well then see a move to the Channel Islands as a highly appealing choice.
Below we have provided a brief overview of the tax incentives that can appeal to HNW/UHNWs in both islands. Note that far more detailed information and analysis should always be secured before making any decision to relocate. What may be right for any individual will depend on their own circumstances.
Jersey
For HNW and UHNW individuals, Jersey’s High Value Resident (“HVR”) regime is the key route onto the island.
Individuals arriving in Jersey as an approved HVR are required to make an annual income tax contribution of £250k (index linked.) In theory, this requires annual chargeable income of £1.25m. However, Jersey legislation provides for notional ‘top-up’ income to be included in an HVR’s assessment if their chargeable income does not meet this threshold, ensuring at least £250k is payable every year.
Any income (wheresoever derived from) which is in excess of the £1.25m threshold is then liable to tax at a highly preferential rate of 1%.
The HVR regime is available by application only. The applicant will supply certain information to the Jersey Authorities to demonstrate that the required criteria are met. Whilst tax paid by the HVR is important, it is not the only aspect that will be considered. The Government want to ensure that the applicant will positively contribute to Jersey’s international reputation, and so matters such as the extent to which the individual will contribute to the community, charity, sporting/youth initiatives etc are vital.
Only a select number of HVR consents are granted each year. Individuals looking to move to Jersey as an HVR will require to undertake steps to have their application made, and approved, ahead of an anticipated move date. This is an area in which we have provided support to many successful applicants.
Guernsey
Guernsey has special tax capping arrangements in place which can be especially attractive to HNW/UHNWs.
When an individual is resident only in Guernsey they can elect to pay the standard charge which is currently £40,000 per annum. No worldwide (non-Guernsey) income needs to be declared. If income from Guernsey sources exceeds £200,000, then the tax charge will also increase (up to a maximum charge of £320,000.) [LG1]
Where individuals are “principally resident” in Guernsey (182 or more days on island) then there are other tax caps available.
- Pay a tax cap of £320,000. This covers all income worldwide up to an unlimited amount. Additional Guernsey tax is then only due on Guernsey sourced property income (at 20%.)
- Pay a tax cap of £160,000 on overseas income. Additional Guernsey tax is then only due on Guernsey sourced income (at 20%.)
Individuals are entitled to claim the above caps immediately upon arriving on the island and becoming either resident or principally resident. No advance claim to the Government is required and these are claimed (and paid) each year to the extent that an individual wishes to. Each spouse must pay their own cap, where applicable.
There is also a further incentive aimed at individuals who are becoming newly resident in Guernsey and spend at least £50,000 in duty on the purchase of a property (akin to property value of approximately £1.4m[LG2] ) within 12 months prior to, or after, arrival. Such individuals can claim a cap of £60,000 per annum for up to 4 years.
A strategic choice for HNW/UHNWs
Both islands offer regimes designed specifically to appeal to HNW/UHNWs and their families, and are seeing incredibly strong demand at present, in particular when coupled with the favourable corporate income tax systems that can apply to individuals who may also be business owners.
Any decision to make the move ought to be fully advised upon in advance, and for UK based individuals this will include taking domestic UK tax advice, together with securing involvement from a Jersey or Guernsey based advisor.
The Channel Islands stand out as stable, transparent, and attractive jurisdictions for HNW/UHNW individuals, and are seeking to benefit from the recent flow of outward migration of wealth from the UK.
For advisors, now is the time to engage with clients who may be affected by UK changes, explore the opportunities available, and position the islands as the ideal solution for their long-term futures.