US Wealthy, British Expats Tempted Back by UK’s Tax Break Shift

Wealthy Americans, British expats, and entrepreneurs are viewing the UK’s new four-year tax break as an opportunity to move—or move back—to the country, according to tax and immigration professionals.

The foreign income and gains regime, which took effect in April, lets those moving to the UK after at least a decade elsewhere, to claim tax relief for foreign income from business and property, dividends and interest payments the first four years of their UK residency.

This could be seen as a nine-year tax planning opportunity, some practitioners said.

“We are getting a lot of inquiries from founders, venture capitalists holding their own proprietary positions, or industrialists looking to sell a part or all their business—for whom there is a liquidity event on the horizon,” Nicolette Bostock, immigration partner at Withers, said.

Highly-mobile wealthy individuals looking to relocate, particularly Americans and British expatriates, are also inquiring about the new regime, tax professionals said.

The FIG tax break replaces a preferential tax provision for non-domiciled residents—or non doms—that attracted wealthy individuals to the UK, allowing them to avoid UK tax on overseas earnings for up to 15 years. The decision to scrap that system has prompted a slew of wealthy individuals to leave.

British law firm Mishcon de Reya is busy handling inquiries on the FIG regime from clients, particularly private equity executives and tech entrepreneurs, with “a big financial trigger event” such as business exits or “significant dividend” or investment gains in the next few years, Charlie Sosna, a partner and head of private wealth and tax at the law firm, said.

Tax Planning

The regime gives “incredibly transient” ultra-high-net-worth individuals a nine-year window to stay and do financial planning in the UK, making the UK an attractive option for relocation, according to Sosna, who has seen particular interest from wealthy individuals from the US and Latin America.

Individuals wouldn’t be charged the UK’s 40% inheritance tax on their worldwide assets—one of the highest among developed nations—that would kick in once they complete 10 years of residency in the UK. This means after getting benefits from the four-year tax-free window on foreign income and gains, wealthy individuals can choose to stay in the UK for another five years to avoid inheritance tax on their assets, Sosna explained.

“There are a lot of Americans looking to move to the UK for a variety of reasons, perhaps led more than ever by political and financial uncertainty in the US,” said Aidan Grant, partner at Collyer Bristow, who mainly deals with wealthy American clients.

The FIG regime gives the wealthy “a short ‘try-before-you-buy’ window to assess whether the UK is a good fit for their longer-term needs,” Grant said.

A passenger stands outside Terminal 4 of Heathrow airport on March 21, 2025 in London.

Photographer: Leon Neal/Getty Images

US wealthy individuals are required to pay taxes on their worldwide income irrespective of their residence status and the FIG regime saves them from additional compliance burdens.

“They still have to pay US taxes on their global income but not worry about another tax system and all the compliance work that they would otherwise have to deal with,” John Barnett, partner at Burges Salmon LLP and vice-president at the Chartered Institute of Taxation, said.

British expats who were planning to come to the UK to typically retire, are finding the new tax a “wonderful surprise,” Dominic Lawrance, partner at Charles Russell Speechlys, said. Lawrance said his firm has had inquiries from a number of expats planning on coming back to the UK anyway, and for whom the “FIG” regime is an unexpected windfall.

Returning British expats couldn’t benefit from tax breaks under the previous non-dom regime as they were considered “domiciled” for tax purposes, leaving them exposed to inheritance tax and taxes on overseas income.

‘Tax Tourism’

Individuals showing interest in the UK’s new tax-break policy may have no intention of remaining once the transaction is complete, Philip Munro, private client and tax partner at Withers, said. That means “they’re not contributing longer-term or meaningfully to tax revenue in the same way as non-doms were doing,” under the previous regime, he added.

“If you make your home in Britain, then you should pay your taxes here too. That is why we abolished the non-dom tax status to invest in our public services, including the NHS,” a UK Treasury spokesperson said, referring to the National Health Service.

Some tax professionals said comprehensive income disclosure requirements for foreigners who invest significant sums in the UK might discourage wealthy clients from taking advantage of the tax break.

Individuals must disclose all their foreign income and gains in tax returns under the regime—even though those earnings aren’t taxed.

“Wealthy clients are concerned about information privacy,” Damian Bloom, head of private client at Taylor Wessing, said. The response from his wealthy clients to the FIG regime has been muted because of its short four-year tax window, compounded by the disclosure rules for those likely to relocate afterward, he added.

The Treasury spokesperson said its new residence-based regime “is simpler and more attractive than the previous one, while it also addresses tax system unfairness so every long-term resident pays their taxes here.”

A lack of a good visa option for wealthy individuals that fits well with the new regime is also making the UK unattractive for long-term investments and for high-net-worth families who favor long-term relocation options, advisers add.

“The question I get asked every day from wealthy clients is: when is the investor visa coming back?” Bostock said.

The UK is in the early stage of drawing up plans for a special visa for foreigners who invest significant sums in Britain. The UK previously had a “tier 1" investor visa that allowed high-net-worth individuals to get UK residency if they invested at least £2 million ($2.7 million) in local companies. The visa was discontinued in 2022.