London remains a UHNW hub despite the recent election of a Labour government and tax upheavals targeting the super rich, according to a Knight Frank report.
The UK capital ranked among the top cities for relocation in the European Lifestyle Report 2024, with London excelling in economic performance and human capital (a city’s capacity to nurture a skilled, innovative workforce).
[See also: Two-thirds of non-doms plan UK exit within two years]
As geopolitical tensions and policy changes continue to unfold, more HNWs than ever are opting to relocate to more favourable jurisdictions. Knight Frank‘s survey – which involved 700 individuals in 11 countries with net worths of at least US$1 million – revealed that 19 per cent of HWNs plan to apply for a second passport or citizenship in 2024.
This shift is driven by a desire for greater lifestyle stability and asset protection. Europe is a top destination due to its transparent property markets, world-class education, and robust healthcare systems, the report’s authors noted.
Despite predictions of a 'wealth exodus' following Labour's landslide victory at the polls in July, HNWs value the capital's vibrant economic climate and its other benefits. However, there are darker clouds on the horizon; Labour’s plan to further clamp down on the UK’s non-dom rules, as well as its intention to add 20 per cent to private school fees by removing the sector’s VAT exemption could all have a bearing on where UHNWs choose to call home. Plus, if Capital Gains Tax (28 per cent) mirrors income tax, the carried interest on private equity gains will increase.
[See also: VAT to be charged on UK private school fees from January]
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Lifestyle wins over wealth taxes
Indeed, the report revealed that wealth taxes are less of a concern for high-net-worth individuals than recent headlines may imply.
This can be partly explained by the fact that wealth taxes are only imposed by a handful of European countries, including Spain, Norway, and Switzerland, while France, Italy, and Belgium apply them selectively to certain assets.
[See also: What is carried interest and how will Labour’s plans affect private equity executives?]
As a result, many HNWs are more concerned about property taxes, which play a larger role in their financial planning. Even then, Europe’s costs for purchasing, owning, and selling property remain relatively favourable compared to other regions.
Vienna led in quality of life. Stockholm shines for its environmental initiatives, while high-net-worths were attracted to Berlin for its superior infrastructure and mobility. Paris, Dublin, and Madrid also stand out in, making them attractive relocation options for HNWIs.
The report highlight distinct gender and generational differences in tax concerns among HNWs: women are more likely to prioritise inheritance tax, while men focus on income tax. Baby boomers show less anxiety over inheritance taxes compared to the younger Gen Z cohort, the survey found.
[See also: Non-doms, IHT and VAT on school fees: What’s at stake under Labour?]
Reflecting on the findings Kate Everett-Allen, head of European residential research at Knight Frank said: ‘Europe stands out in evaluations of where HNWIs can achieve an ideal lifestyle while safeguarding their assets.’
[See also: More non-doms call UK home – but for how long?]
‘As 2024 shapes up to be one of the biggest election years in history, the uncertainty surrounding tax and policy changes is influencing property markets, cross-border investment, and wealth flows.’
