With a new UK Prime Minister and government, naturally the wealth management sector wonders what bearing this will have on tax for HNW individuals and other citizens, as well as the economic policy agenda. This news service sat down with RBC Wealth Management to discuss the issues.

With speculation rising on potential tax changes under the new government led by Andy Burnham, WealthBriefing sat down with Nick Ritchie, senior director of wealth planning at RBC Wealth Management, to discuss how he would be advising his clients.

Ritchie stressed the need to avoid knee-jerk reactions and described a number of approaches that HNW individuals could take to mitigate risks without allowing tax concerns to dominate their thinking. 

“There is always increased policy uncertainty and risks when governments change or when a new Prime Minister is appointed,” he told WealthBriefing in London. “Our messaging is consistent. We don’t plan on the basis of uncertainty,” he said.

Ritchie has received increasing queries from clients in the face of this uncertainty, and about a potential wealth tax, for example. Ritchie said he looks at how government plans affect clients, such as a rise in inheritance tax (IHT) or a change in gifting rules, as most high net worth individuals will consider transferring wealth. “Some clients have, for instance, a wealth planning retainer that is reviewed regularly,” he said.

Along with a number of wealth managers, Ritchie emphasised the benefits of gifting or setting up a trust. Gifting money or assets is a simple way to cut an inheritance tax bill. People can give up to £3,000 ($4,011) a year tax-free to anyone, or unlimited gifts to their spouse or civil partner. Additionally, individuals can make regular gifts from their income – helping to cut the size of an estate over time. But gifts made within seven years of death can still be taxed.

In the case of gifting a house, Ritchie noted that gifting can exist, for instance, with a reservation rule. “If a client gifts his house to his children for tax purposes but continues to live in it, it might not be considered as a genuine gift unless the clients are paying rent,” he said. “Another option is to take out insurance that is payable on death.”

Fresh official data from HM Revenue & Customs on IHT shows what's at stake. HMRC statistics released this week show that total IHT liabilities were £7.03 billion for 2023/24, up from £6.7 billion in 2022/23. The nil-rate band has been frozen at £325,000 since 2009, while the residence nil-rate band has been fixed at £175,000 since 2020/21 until 2031. Price rises over these periods erode the real value of these thresholds and drag more estates into the IHT net. Measures such as including pension benefits in estate calculations from April 2027 will also add to the number of families facing a potential tax liability.

In addition, Burnham is considering a 10 per cent “death tax” on every estate in the country, scrapping inheritance tax to help fund a new National Care Service, potentially widening the number of estates affected.

Meanwhile, using philanthropy is continuing to gain ground, Ritchie said, with HNW individuals identifying a spare pot of money which they use to invest in causes important to them, such as climate change.

Non-doms and relocation
Richie told WealthBriefing that they have been seeing increasing questions from HNW individuals about relocation planning. “In particular, there has been a big shift after the abolition of the UK's resident non-domicile regime,” Ritchie said. However, he noted that there have been winners and losers, as there has been a four-year break with the new Foreign Income and Gains (FIG) regime. (See an analysis here about how the new system might have a "silver lining" for some people.)

HMRC’s latest non-dom statistics released this week show that around 9,000 taxpayers left the non-domiciled taxpayer population in the tax year ending 2025, down from about 11,200 in the previous year. However, the number of newly-arrived non-domiciled taxpayers also fell, from around 10,000 to 8,600.

Graeme Privett, head of private client at HaysMac, said yesterday that whilst the UK has attracted new arrivers, it is not clear whether this cohort will remain in the UK after the end of the four-year FIG window, at which point they would have to accept UK tax on their worldwide income and gains. “Ongoing talk of wealth taxes also does not inspire longer-term confidence in the UK as a home for wealth creators,” Privett said.

“The reality is that the UK has become less attractive to globally mobile wealthy individuals following the scrapping of that regime coupled with the ever-increasing scope of inheritance tax,” Mark Jephcott, senior relationship manager at Utmost, added. “This matters because they are the largest contributors to the tax base and once they leave it is very difficult to replace them.”