Cover Story: The Great Wealth Migration: Why the Ultra-Rich Are Fleeing Britain
Listen to the full version
Ann Kaplan Mulholland had an audacious plan. The 64-year-old Canadian businesswoman, worth an estimated £500 million ($646 million), had spent years living in Britain. She and her husband even bought a £5.5 million castle once occupied by Henry VIII, embracing a medieval lifestyle.
But when she learned about Britain’s sweeping new tax reforms, she hatched an unconventional idea — turn her castle into an independent country.
Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.
Subscribe to both Caixin Global and The Wall Street Journal — for the price of one.
- RELATED
- DIGEST HUB
Digest Hub
Back
- Ann Kaplan Mulholland planned to avoid UK taxes by making her castle a sovereign nation but abandoned the idea when it proved legally impossible.
- The UK will end its Non-Domiciled Individuals tax status in 2025, leading many wealthy individuals to leave, seeking lower tax jurisdictions like the UAE and the US.
- A global crackdown on tax avoidance, spearheaded by initiatives like the Common Reporting Standard, is pushing the wealthy to rethink financial strategies amid increasing transparency.
Ann Kaplan Mulholland, a wealthy Canadian businesswoman residing in Britain, devised a bold plan to transform her £5.5 million castle into an independent country to avoid high UK taxes, particularly a 40% inheritance tax. Though her proposal failed, it prompted discussion among tax lawyers, highlighting a growing trend of wealthy individuals facing diminishing tax loopholes in the UK and across the world. This is fueled by global efforts to combat tax avoidance. [para. 1][para. 2][para. 3][para. 4]
A significant policy change in the UK is at the root of this exodus. From April 2025, the UK will eliminate its Non-Domiciled Individuals (non-dom) tax status, which for over two centuries allowed the wealthy to avoid taxes on overseas income. This system, originally created to shield foreign property owners during the Napoleonic wars, evolved into a tax haven for the rich living in Britain but claiming a permanent home elsewhere. High-profile beneficiaries included Akshata Murty, wife of former Prime Minister Rishi Sunak. In light of economic pressures and public demand for tax fairness, the newly elected Labour government led by Prime Minister Keir Starmer is dismantling this regime. [para. 5][para. 6][para. 7][para. 8][para. 9]
Replacing the non-dom status is a four-year foreign income tax exemption for new UK residents, after which global earnings will be taxed as any other UK income. The UK Treasury estimates that abolishing the non-dom status could raise an additional £2.7 billion annually. However, critics warn that this change might lead to reduced investment and job losses, estimating that it could eliminate 23,000 jobs in six years. [para. 10][para. 11]
Facing higher taxes, many wealthy individuals are relocating. Henley & Partners reports a 157% increase in high-net-worth individuals leaving the UK in 2024, predicting even larger numbers in 2025. The United Arab Emirates, the US, and Singapore are top destinations for these individuals, drawn by low or no personal income tax policies, strategic locations, and investment opportunities. [para. 12][para. 13][para. 14]
Despite the crackdown on tax avoidance worldwide, some wealthy individuals are adopting strategies to continue shielding their assets. The OECD's Common Reporting Standard (CRS) mandates financial institutions to report foreign tax residents' accounts to their home countries, limiting traditional options for hiding wealth. Since the CRS's inception, tax authorities have recovered billions in unpaid taxes. Although the US operates under a different system, known as FATCA, certain wealthy individuals previously used "golden visas" and "investment passports" to circumvent these systems, but tighter regulations have diminished their effectiveness. [para. 15][para. 16][para. 17][para. 18]
Geopolitical tensions, such as potential changes to the US-China tax treaty, pose further challenges to global tax planning. If revoked, cross-border investment could be significantly affected, as businesses may face dual taxation without the ability to offset foreign taxes. While a recent presidential memorandum in the US suggests a review, it lacks binding authority without further legal action. Nevertheless, the global trend is clear: greater tax transparency and stricter compliance is becoming the norm, reducing options for tax avoidance and prompting wealthy individuals to reassess their financial strategies. [para. 19][para. 20][para. 21][para. 22][para. 23][para. 24]
- Infosys
- Infosys is an IT giant founded by the father of Akshata Murty, who held a £700 million stake in the company. Her non-dom status allowed her to avoid £2.1 million in U.K. taxes annually and potentially bypass £280 million in inheritance taxes.
- Henley & Partners
- Henley & Partners is a global investment migration consultancy. They estimate significant emigration among high-net-worth individuals from the UK, with 10,800 leaving in 2024, a 157% increase from 2023. They predict that 135,000 will relocate in 2025. The United Arab Emirates (UAE), the United States, and Singapore are the top destinations. The firm notes this trend reflects a shift in the global landscape of wealth and power.
- Vialto Partners
- Vialto Partners is described in the article as a globally independent tax and immigration consulting firm. Shen Fengshang, who works there as a tax advisory director, comments on the firm’s role in advising clients about the global tax landscape, particularly the shift in investment and residency strategies due to tightening tax enforcement worldwide. The firm provides insights into asset allocation and suggests strategic approaches for wealthy clients to navigate changing tax regulations.
- Mishcon de Reya
- Mishcon de Reya is described as one of London's elite law firms. A lawyer from the firm, Wang Chuanqi, mentions that the focus for the ultra-wealthy is not to flee the UK but to strategically reduce time spent there to avoid becoming a UK tax resident while maintaining a global asset footprint.
- UBS Global Wealth Management
- UBS Global Wealth Management’s Chief Investment Office is experiencing significant shifts in strategic asset allocation. Their survey of 320 family offices, managing on average $2.6 billion each, reveals plans to increase investments in North America and Asia-Pacific—excluding Greater China—over the next five years. They view North America as a strong investment destination due to emerging market opportunities and the rapid expansion of U.S. tech, particularly in AI.
- DLA Piper
- DLA Piper is described as a global law firm that warned about potential disruptions in corporate tax planning if the 1984 U.S.-China tax treaty is revoked. This revocation could lead to dual taxation, reducing incentives for capital flows between the two countries and complicating corporate residency rules, permanent establishment definitions, cross-border royalties, interest payments, and M&A transactions.
- Tian Yuan Law Firm
- Tian Yuan Law Firm noted that if the U.S.-China tax treaty is terminated, it could complicate corporate residency rules, permanent establishment definitions, cross-border royalties, interest payments, and M&A transactions. The firm highlighted that companies might face a combined corporate tax rate exceeding 50%, significantly straining their finances.
- EY
- EY, also known as Ernst & Young, is a global professional services firm. In the article, Wang Wenhui, the head of business tax services for Greater China at EY, mentions that global tax enforcement is tightening and predicts that other countries will follow the UK's lead in tax reforms. The article highlights EY's focus on understanding and adapting to the shifting global tax landscape toward greater transparency and stricter compliance.
- 2014：
- China signed a FATCA agreement with the United States.
- 2017：
- Tax authorities have recovered more than 130 billion euros in unpaid taxes, interest, and penalties.
- 2018：
- China joined the Common Reporting Standard (CRS).
- 2022：
- Australia reported 1.015 million Chinese tax residents' accounts to China under CRS, with a combined balance of A$32.3 billion.
- 2023：
- Henley & Partners estimated that there was a significant migration of high-net-worth individuals from Britain, with an increase in departures.
- 2023：
- Donald Trump signed a presidential memorandum directing a review of the 1984 U.S.-China tax treaty.
- 2024：
- Henley & Partners estimated that more than 10,800 high-net-worth individuals left Britain.
- 2024：
- 111 jurisdictions, including traditional tax havens, have committed to the Common Reporting Standard (CRS).
- 2025：
- Henley & Partners predicted that 135,000 high-net-worth individuals would relocate from Britain.
- PODCAST
- MOST POPULAR
Sign in with Google
Sign in with Facebook
Sign in with 财新