Labour’s inheritance tax grab is breaking up families

First published by The Telegraph here.

Until very recently, I would have considered this an extreme reaction. But now, it’s becoming a serious and increasingly common discussion among wealthy individuals, and not just the stereotypical globally mobile non-doms and billionaires.

What’s striking is that many of those contemplating a move are people who think of themselves as British through-and-through. These are not people living a jet-set lifestyle or bouncing between tax jurisdictions. They are entrepreneurs, business owners and high earning professionals, often young parents who are perfectly happy living in the UK.

Yet the Government’s decision to scrap the concept of domicile for tax purposes and to apply inheritance tax (IHT) based solely on residence has pushed them into contemplating something that was unthinkable a few years ago.

Since April 2025, it’s been possible to avoid IHT by becoming a non-UK resident for 10 years. After that period abroad, a person’s overseas assets fall outside the UK’s IHT net – and crucially, if they eventually return to Britain, those assets remain outside the system for another decade.

This is pushing families into making hugely difficult decisions. I’ve seen plenty of instances where one of the couple (typically the husband) has relocated alone, leaving the other to remain in the UK with the children. Yes, this is really where we are.

The logic is bewildering: to protect their children’s inheritance, people are seriously considering spending a decade away from their families.

This is the human reality behind a government policy to “close a loophole” and “deliver fairness”. Instead, it has created a dramatic incentive for long-term UK families to leave.

I’ve seen this trend first-hand. Around 10pc of my clients have already left, and a further 10pc to 15pc are actively considering it. I will have far less self-assessment tax returns to submit for my clients next January.

These are individuals that typically have net wealth of £15m or more.

The Government may believe this is a small, manageable group. But in my experience, this is the segment that invests in UK businesses, supports charitable initiatives, and contributes significant taxes. And the behavioural effect is cascading through wealthier circles; the idea of “taking a decade abroad” has gone from fringe conversation to mainstream planning.

While some choose far-flung destinations with favourable regimes, such as Dubai and Singapore, others are selecting more pragmatic options closer to home. Jersey and Guernsey are popular because of proximity; a day trip to London to watch a school play without triggering the UK residency rules is easier from the Channel Islands than from the UAE.

Perhaps the most worrying trend is generational. Entrepreneurs in their 30s and 40s – people building the next generation of British businesses – now view the UK tax system as unworkable.

Business Asset Disposal Relief (previously called Entrepreneurs Relief) is worth a meagre £60,000, significantly down from its peak in the mid-2010s of £1.8m. National Insurance is up, corporation tax is up and dividend tax will be up in a few weeks.

I’ve also observed a trend for younger higher-earning couples (on more than£100,000 gross per year) leaving the UK to escape taxes as they start their wealth creation journey. I can see the appeal for a 20-something-year-old with no children and dependent parents to have five to 10 years in a warmer, low-tax jurisdiction to accelerate wealth accumulation.

The Government and Treasury should be panicked by this increasing trend, as this is the demographic of taxpayers where they would make the most money– high effective rates of income tax and National Insurance, as well the domestic spending in shops and restaurants contributing to VAT receipts.

If they do relocate, their children may never settle in the UK. What is currently a trickle could become a generational exodus.

Many clients would happily have paid hundreds of thousands of pounds per year to retain non-dom protections. Compared to the old £90,000 annual remittance basis charge, that is extraordinary. And it shows the Government could have struck a balance politically, economically and morally that protected revenue while retaining globally mobile wealth.

Instead, the reforms have created the worst of both worlds – a system that is harsher and easier to avoid by simply leaving the country.

Losing even a small percentage will hurt. Losing a generation could reshape Britain’s economic competitiveness for decades.

The Government must urgently reconsider the structure of the new rules. Because right now, the only thing policymakers can rely on is that grandchildren are delightful, but even that may not be enough to keep you in the UK.