Latest news with #wealthyIndividuals
The Independent
3 days ago
- Business
- The Independent
Rachel Reeves cannot afford to lose any more non-doms
Rachel Reeves is to water down plans scrapping her non-dom tax rules amid concerns about the number of wealthy individuals deserting the UK. It must be true, because it's being repeated everywhere – complete with a bland, non-denial from the Treasury: 'The government will continue to work with stakeholders to ensure the new regime is internationally competitive and continues to focus on attracting the best talent and investment in the UK.' A key item under discussion is said to be the proposal to make non-doms' worldwide assets liable to inheritance tax, or IHT, including those held in foreign trusts. There is no doubt many rich people have gone. One analysis by Bloomberg puts the number of company directors who have left at 4,400 in the past year. Examination of Companies House filings shows departures were 75 per cent higher in April than in the same month last year. The worst affected sectors were finance, insurance and property, all of them popular with non-doms. In the most expensive areas of London, stories abound of shuttered mansions, and a knock-on effect across restaurants, hair and beauty salons, car firms and all the other ancillary services. The UK, once a favoured magnet for the world's billionaires and multi-millionaires, has fallen off its perch. A recent Oxford Economics survey found that 60 per cent of tax advisers expect more than 40 per cent of their non-dom clients to leave within two years of Reeves ending their beneficial status. With them will go their families, close staff – and their money. It was the latter that made previous governments, including Labour, seek to attract them in the first place. If they base themselves in Britain, they are more likely to spend and to invest here. That is why other nations are doing their level best to woo them. It's what the Treasury means when it refers to the new regime being 'internationally competitive'. What is bizarre and shaming is that this administration did not see it coming. Seemingly, ministers did not realise that non-doms would quit. They did not appreciate that, in today's world, rich people can move freely and easily and work from anywhere. Either they are guilty of extraordinary unworldliness, deluding themselves that wealthy foreigners would carry on living in the UK merely because they like it here – ignoring the effect on their finances; or they simply did not care, and allowed political ideology to prevail. Whatever the answer, they are now engaged in the sort of reversal and damage limitation exercise which is becoming all too familiar where this government is concerned. The question now is: will it be enough? Already, South Africa's richest self-made woman Magda Wierzycka, the billionaire behind UK venture capital fund Braavos, has stated she will shelve plans to leave should the chancellor U-turn on IHT: 'I would absolutely stay and it's not about protecting my money from the tax man. I pay all my taxes, but South Africa has foreign exchange controls and I don't know whether [my estate] would be able to pay the IHT bill under the current rules.' Whether others are so persuaded, and if Reeves does pull back entirely on IHT, remains to be seen. The problem for her and for Keir Starmer is that the tone has been set. Even if they do climb down, the feeling persists that this iteration of Labour (as opposed to that of Tony Blair, which famously declared it was 'intensely relaxed about people getting filthy rich') cannot abide well-off people. The purging of the non-doms followed a pattern. It joined VAT on private schools, the removal of the winter fuel allowance, hitting farmers with their own new IHT bills, and other measures, aimed at the more advantaged end of society. They can afford it, appeared to be Downing Street 's view. That will be hard to shake-off. The hope must be that the attractions of the UK will weigh heavily and the non-doms will not exit and some, many even, will return. Starmer and Reeves, having set their calamitous course, have much work still to do.
The Guardian
4 days ago
- Business
- The Guardian
Reeves considers softening inheritance tax changes amid non-dom backlash
Rachel Reeves is considering caving in to City lobbying and softening changes to inheritance tax that affect wealthy individuals who would previously have been 'non-doms', reports suggest. In her autumn budget, the chancellor confirmed that she would scrap the non-dom tax status, which allowed wealthy individuals with connections abroad to avoid paying full UK tax on their overseas earnings. 'Those that make the UK their home should pay their taxes here,' she said at the time. Jeremy Hunt, her predecessor, had already sounded the death knell for non-dom status, but Reeves's changes were expected to raise an additional £12.7bn over five years. She then announced minor adjustments to the transitional arrangements to the new regime at the Davos summit in January, after a backlash from some wealthy individuals. However, Reeves is now reportedly considering modifying changes that came into force in April, which make the worldwide assets of all UK residents subject to inheritance tax (IHT) at 40% – even if these are placed in trusts, according a report in the Financial Times. Responding to the report, a Treasury spokesperson said: 'As the chancellor set out at spring statement, the government will continue to work with stakeholders to ensure the new regime is internationally competitive and continues to focus on attracting the best talent and investment to the UK.' There have been reports of an 'exodus' of wealthy individuals from the UK, though these have been questioned by some analysts – including in a recent study from the thinktank the Tax Justice Network. When it projected the revenue from closing non-dom loopholes at Reeves's autumn budget, the independent Office for Budget Responsibility allowed for an additional 12%-25% of non-doms to leave the UK this year. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion But Reeves is keen to mollify wealthy global investors, as the Treasury is determined to attract foreign investment into the UK, as part of its mission to kickstart economic growth. She already faces a challenging fiscal picture in the run-up to the autumn budget, as the OBR is expected to revisit its optimistic productivity forecasts, potentially downgrading growth projections as a result.
Forbes
03-06-2025
- Business
- Forbes
5 U.S. Estate Tax Surprises For Nonresident Alien Investors
Foreign investors can win big with United States investments. While holding U.S. assets can be lucrative, the U.S. estate tax regime is complex and often misunderstood by nonresident alien investors. NRAs, those who are neither U.S. citizens nor residents for estate tax purposes, are often very surprised when they learn of the challenges imposed by the estate tax rules. This article summarizes 5 estate tax surprises that often catch the NRA investor off-guard. These include the limited exemption amount, common misconceptions about asset types, the requirement to disclose the value of worldwide assets on the NRA's estate tax return, and other pitfalls that can complicate estate planning. One of the biggest surprises for NRA estates is the paltry $60,000 exemption amount for U.S. situs assets subject to estate tax. U.S. citizens and residents are taxed on the value of their assets owned worldwide, but they benefit from a very generous $13.61 million federal estate tax exemption (as of 2025), and under the Trump Administration, this may rise to an inflation-indexed $15 million in 2026. NRAs are limited to a mere $60,000 exemption for U.S. situs assets. This means that if the total value of an NRA's U.S. situs assets exceeds $60,000 at the time of death, the excess is subject to U.S. estate tax at rates ranging from 18% to 40% based on a progressive table, with amounts exceeding $1 million taxed at the 40% rate. Wealthy foreign investors typically hold significant U.S. assets such as real estate, stocks, or business interests. For them, the low exemption amount can result in substantial estate tax liability that could have been mitigated with proper advance planning and structuring. The harsh effect of the estate tax can be seen for example, by an NRA with $1.5 million in non-exempt U.S. situs assets. Assuming no treaty applied to reduce the tax and no deductions are taken, the estimated U.S. estate tax would be a punishing $532,800 (a tax hit that is over 35% of the U.S. investments, significantly eroding their value). A very common source of confusion arises when identifying which assets are subject to, or exempt from, U.S. estate tax. Many NRAs mistakenly believe that cash-related holdings are exempt from the estate tax. They do not appreciate the subtle but highly important nuances. For example, bank deposits in a U.S. bank are generally not considered U.S. situs assets due to special rules. They are thus exempt from U.S. estate tax, provided they are not connected to a U.S. trade or business. Typically, this exemption applies to cash held in checking or savings accounts, certificates of deposit, or similar instruments. Many NRAs mistakenly assume this exception applies to cash held in a U.S. brokerage account but are shocked to learn that this cash is treated differently. It is considered a U.S. situs asset subject to the estate tax. Estates of foreign uninformed investors will be faced with a surprise estate tax bill since the tax law's distinction transforms what seems like a 'safe' cash holding into a taxable asset. The U.S. estate tax treatment of U.S. stocks, U.S. mutual funds, U.S. ETFs, and similarly structured U.S. vehicles is clear. These are U.S. situs assets subject to estate tax, regardless of where they are held. It will not be a shield from U.S. estate tax simply because the assets are held in a foreign brokerage account, or in the name of a nominee. Furthermore, the custodian will usually not release the assets to heirs without receiving what is called a Federal Transfer Certificate or other proof that U.S. estate tax has been fully paid. It can sometimes take well over a year for the NRA's U.S. estate tax return on Form 706-NA to be filed, tax paid and the matter to be fully resolved with the IRS. This rule can and does, trap NRAs who hold substantial U.S. investment portfolios of through international accounts. Too many foreign investors are unaware of this exposure until it's too late. This is why advance planning should be undertaken. For example, use of a properly formed estate tax 'blocker' is often a simple and beneficial solution. Perhaps one of the most jarring surprises for NRA estates is the requirement to disclose the value of the decedent's worldwide assets when filing the U.S. estate tax return. Only the assets treated as located within the U.S. are subject to the estate tax, but the IRS requires a complete picture of the decedent's global estate to determine the computation of the tax. This requirement is often viewed as very intrusive and if more investors were aware of it, they might reconsider U.S. investments or at least, implement ownership structures to avoid the estate tax. The disclosure of worldwide asset value is required for the IRS to determine whether certain deductions and treaty-based benefits may apply and specifically to calculate the amount of allowable deductions under a special proportional deduction rule. If the estate wants to benefit from these, the disclosure must be made. Although the worldwide disclosure is technically required only if the estate claims deductions or treaty benefits, omitting the information can possibly cause the return to be treated as incomplete. This can jeopardize the estate's ability to claim any of these benefits at a later time, for example, on audit. As such, full disclosure of the value of the decedent's worldwide asset value is generally the safest course. Sophisticated investors often use blocker structures, for example, holding U.S. assets through a foreign corporation. This permits the investor to avoid U.S. estate tax entirely. At death, the decedent owns shares in a non-U.S. corporation. Since shares of a foreign corporation are generally not U.S.-situs property, they are not subject to U.S. estate tax. By holding the U.S. assets indirectly through such entities, NRA investors can avoid both the estate tax on death and the intrusive requirement to disclose worldwide assets. Such strategies are commonly used by high-net-worth individuals who want to tap the U.S. market but wish to avoid triggering the U.S. estate tax regime. Think you're good because of a treaty? Think again! Another unwelcome surprise for the foreign estate lies in the limited scope of estate tax treaties. It is true that the U.S. has estate tax treaties with certain countries to mitigate double taxation, but too often they provide less relief than expected, and as discussed, claiming treaty relief means significant disclosure about the value of worldwide wealth. Some treaties allow for a prorated exemption based on the ratio of U.S. situs assets to worldwide assets. For high-net-worth taxpayers, this may not significantly reduce the U.S. estate tax burden. Complications also when the decedent's home country also imposes estate or inheritance taxes on the assets. Quite often there is a mismatch and the lack of coordination between the two tax systems can lead to double taxation, unless specific treaty provisions apply. The foreign estate may be surprised to find that the home country's tax authorities and the IRS both claim a share of the estate. Careful planning is needed when foreign laws and U.S. laws overlap and sometimes collide. Many possibilities exist, including ownership structures and certain investments, but taxpayers must be proactive in learning and implementing the plan beforehand. For example, one lesser known but welcome surprise is the treatment of life insurance proceeds paid out on an NRA's life. Even if paid by a U.S. insurer, these proceeds are typically exempt from U.S. estate tax. The use of such insurance can provide a robust planning tool for NRAs with significant U.S. assets since the life insurance can provide liquidity to cover the U.S. estate tax without itself being taxable. Get the proper advice so that efficient planning strategies are not overlooked! Stay on top of tax matters around the globe. Reach me at vljeker@ Visit my U.S. tax blog
Bloomberg
30-05-2025
- Business
- Bloomberg
India's Super-Rich Spur a Wealth Management Frenzy
India's growing list of super-rich investors are reshaping the country's wealth management industry like never before. (Source: Bloomberg)
Bloomberg
21-05-2025
- Business
- Bloomberg
UK Losing Wealthy to Middle East, Amanda Staveley Warns
Amanda Staveley, the former director of Premier League football club Newcastle United, says the UK needs to change policies to retain wealthy individuals. Mayfair, one of London's most expensive areas, is "concerningly quiet," she said. "I'd like to see the government do more around attracting people back," she said of the UK. "We need to be as competitive as possible with our European counterparts as you will continue to see an exodus to the Middle East." Staveley, the CEO of PCP Capital Partners, made the comments during an interview with Francine Lacqua at the Qatar Economic Forum 2025, powered by Bloomberg. (Source: Bloomberg)
