LONDON (FIRMS): An Introduction to Private Wealth Law

The UK private client sector stands at a crossroads, shaped by a confluence of economic, legal and political developments that are redefining the landscape for ultra-high net worth individuals and families who are either still based in the UK or have assets or businesses here.

Significant changes to the taxation of international wealth in the UK have grabbed headlines globally, with the immediate response being one of negativity and a feeling that the wealthy were fleeing the UK in search of more attractive regimes. However, as the dust has settled and a wider view is taken of the UK’s new “nine-year window”, it is clear that the UK remains an attractive jurisdiction and is still competing (or even out-competing) other jurisdictions seeking to attract the same (ultra) high net worth community.

Non-Dom Tax Changes: A Watershed Moment

Perhaps the most significant development in the UK private client sector is the reform of the non-domiciled (“non-dom”) tax regime. For centuries, the UK’s non-dom rules have been a cornerstone of its appeal to international clients, allowing individuals who are resident but not domiciled in the UK to benefit from favourable tax treatment on foreign income and gains. However, legislation introduced with effect from 6 April 2025 abolished this historic status and introduced a new, much shorter regime in its place, known as the Foreign Income and Gains (FIG) regime.

The changes to the taxation of income and gains and the introduction of the FIG regime were coupled with significant changes to the UK inheritance tax regime. This saw the application of worldwide inheritance tax on individuals and associated structures after ten years of UK residence.

These changes may have far-reaching consequences. Many international families and entrepreneurs chose the UK as a base reliant on the flexibility offered by the non-dom regime. These changes have prompted some families to reconsider their residency position in the UK, instead seeking alternative jurisdictions. For those wishing to stay, there are certain transitional reliefs available and a lot of restructuring to be carried out to ensure they remain as efficient as possible.

It is fair to say that some left the UK, unwilling to accept the more significant tax burden despite a desire generally to stay in the UK for the other benefits it offers (culture, education, security, economic opportunity, etc). However, many of those who left the UK are finding that the grass is not always greener and are already enquiring about returning to the UK. This is coupled with significant interest among those wanting to come to the UK in taking advantage of the FIG regime and limited inheritance tax exposure for nine years, known as the “nine-year window”.

With change comes opportunity, and the UK remains a place of opportunity for the international wealthy community looking at their options for global relocations, offering an attractive “nine-year window” for their tax planning alongside arguably the best education system and culture scene globally, high levels of security and the robust rule of law.

Life’s Two Certainties: Death and Taxes

In addition to the significant changes to the non-dom regime, there are significant changes to the taxation of agricultural property and business property. These two asset classes currently benefit from up to 100% relief from UK inheritance tax (IHT) on death or certain lifetime transfers. Under the proposed changes, this relief will be capped at the first GBP1 million of qualifying assets, and thereafter the relief will effectively reduce the IHT payable by 50%. This results in an effective IHT rate of 20% on the market value of qualifying assets on death (above the first GBP1 million).

Due to take effect from 6 April 2026, these proposals have caused significant workflows for those advising UK farm and business owners as they look to restructure their affairs to consider these new rules and how best to pass these interests down to the next generation as efficiently as possible.

Succession Planning and Family Governance

Succession planning remains a central concern for private clients, particularly in the context of changing family dynamics and increased international mobility. Clients are increasingly focused on ensuring that their wishes are respected, that vulnerable beneficiaries are protected, and that family disputes are minimised.

Discussions regarding succession and governance have never been more critical, with reports of approximately USD85 trillion being passed down to the next generation as part of the “great wealth transfer”. Clients are considering their legacy, and discussions should not focus on “current” and “next” generations, which can set an immediate combative tone between the two generations. Instead, engagement should be with the family as a whole unit, considering its legacy and how wealth (in the wider sense of the word) and control can transfer seamlessly to achieve a holistic goal.

The use of trusts continues to be popular, but clients considering trust planning must navigate a shifting tax regulatory environment that increasingly spills into the public sphere. However, following the advent of the UK’s Trust Register, there is increasing client awareness around the optics of using trusts, particularly in offshore jurisdictions, and some clients are instead turning to alternative succession planning vehicles to achieve their objectives.

Many families are increasingly exploring the use of family investment companies and family limited partnerships instead, particularly those families permanently based in the UK and for whom the tax cost makes trusts prohibitive. Both vehicles can be established relatively simply but with bespoke governance frameworks that can facilitate the delineation of control/investment decision-making from economic benefit.

International Considerations and Cross-Border Issues

The UK, and London in particular, remains a hub for international families and, as a result, all top-tier UK private client firms must grapple with cross-border issues. Clients with assets, family members or business interests in multiple jurisdictions must navigate a complex web of legal and tax rules, often requiring specialist advice. The UK’s departure from the European Union has added further complexity, particularly in relation to succession, tax and immigration.

Whilst the non-dom changes have, to some extent, precipitated the departure of some wealthy families from the UK, a strong FX rate and the political environment across the Atlantic have caused a noticeable spike in the number of Americans looking to either invest in the UK and/or make a wholesale move here. Buying agents report an influx of US buyers at the prime and super prime level of the market, whilst tax advisers who can advise on dual US and UK taxation are strongly in demand. The US approach to worldwide taxation by citizenship also means the changes to the non-dom regime are generally of less relevance to Americans seeking to set up base in the UK.

Digital assets and cryptocurrencies are also emerging as new areas of opportunity and concern. The legal and tax treatment of these assets is still evolving internationally, and the recognition and understanding of these assets by corporate and fiduciary service providers remains patchy. Advisers are working to develop best practices for the ownership, transfer and taxation of digital assets, ensuring that clients are well-positioned to take advantage of new technologies while managing potential pitfalls.

Opportunities and Challenges Ahead

In summary, the UK private client sector is undergoing a period of significant transformation, giving rise to opportunities for clients and their advisers. Clients and wealth are more transient than ever, with the world rapidly evolving as clients seek safe harbour, and stable advisers who are able to see through the noise and offer stability to their clients.

Concerns have been raised about the future of the UK as an attractive destination for global wealth, but the proof will be in the pudding. The UK remains a standout for legal advice to the international wealthy community, and continues to attract ultra-high net worth individuals with its new “nine-year window”, alongside its long-standing non-tax-related benefits. Coupled with the significant changes to the taxation of domestic individuals, it is clear that advisers will remain consistently busy as they seek to protect their clients’ wealth and legacies.