Autumn Budget 2025 this week has seen tax dominate not just news feeds but real-life conversations too. Many clients come to us seeking to understand why other people – from pubs to golf clubs to dinner tables – seem to have much more creative tax solutions in their armoury.
When it comes to tax planning, the landscape has changed significantly. Ideas and strategies that were deemed perfectly acceptable 10-15 years ago may be perceived as overtly aggressive in today’s climate.
In our experience, tax solutions that seem too good to be true, almost always are. Headlines won’t give you all the information you need to make decisions; non-professionals’ words of wisdom may turn out to be wishful thinking.
In this article, we dig into the detail of some of the strategies you may be considering – including leaving the UK, settling trusts, other transfers of value and stockpiling wine and watches – and highlight the importance of thinking holistically before decisions are made. To spice it up, we have added a couple of our favourite ideas which don’t quite measure up to being challenged.
“Going non-resident”
There are many jurisdictions around the world, including within continental Europe, that offer new residents, and indeed in some cases existing residents, very beneficial tax rates. As a result, as is widely reported, many individuals have ceased to be UK resident in pursuit of more favourable tax regimes.
For many individuals, leaving the UK may well result in a much better financial outcome. However, our experience suggests that these decisions are sometimes made without considering the broader picture.
It is critical to give thought to the financial, practical and emotional consequences of becoming non-resident as well as the impact on any UK business interests. Here are five key questions you should be thinking about.
Is becoming non-resident really feasible at all?
The UK residence legislation is very prescriptive, making it crucial to consider all the appropriate legislation. Where you are not automatically UK tax resident – by virtue of a UK employment, amount of time spent in the UK, or the “only home” test – you need to consider your ties to the UK to determine the number of days you may spend in the UK without being UK tax resident. The result may be very low depending on your connections to the UK.
Where individuals become non-UK resident and leave behind either grownup children (and grandchildren) or parents, our experience is that limiting time spent in the UK can be very difficult.
Can you be “out” for long enough to make it worthwhile?
If you leave the UK to sell a business or to take material dividends from your business, you will generally need to be non-UK tax resident for more than five years to avoid tax on those gains or dividends.
Our experience is that clients often underestimate the impact of being non-resident for more than five years. To put this into perspective, Prince Charles became King in September 2022 i.e. only just over three years ago. More than five years can feel like a very long time, particularly, as noted, where you are leaving behind family in the UK.
Might there be regime change?
Tax regimes change. During your period of non-residence, tax regimes may change in both the UK and wherever you are now living. This may, for example, extend the period during which you need to be non-resident to avoid a tax charge on return, or tax rates may increase in the country individuals have made their home.
Will it help with UK inheritance tax?
An individual’s UK inheritance tax (IHT) liability was previously determined by their domicile. With effect from 6 April 2025, the concept of Long-Term UK Resident (LTUKR) was introduced. Generally, individuals who are LTUKR are subject to IHT on their worldwide assets, and individuals who are not, are subject to UK IHT only on UK situs assets.
This does mean that UK citizens who would previously have found it hard to escape the clutches of UK IHT can now do so if they cease to be LTUKR. Broadly this means leaving the UK and remaining resident outside the UK for more than 10 years.
It is therefore notionally possible for you to aim to release yourself from the UK IHT net by leaving the UK permanently. It is important, however, to note that UK assets will be within the scope of UK IHT irrespective of the residence position of the owner.
It may be possible to structure the holding of UK assets through offshore structures to avoid UK IHT. However, specific legislation applies in relation to UK residential property, and such property will remain within the scope of UK IHT irrespective of structuring.
Hence if leaving the UK to avoid UK IHT, think carefully about holding structures and assets – in particular residential UK property.
What would be the impact for business owners of working abroad?
Many countries have legislation which seeks to bring companies that are managed and controlled in their jurisdiction within the scope of their local taxes i.e. the business may end up paying tax somewhere else on its entire profits. This can be a particular risk where business founders leave the UK.
Even where this risk can be avoided, you should carefully consider the risk that working in a jurisdiction creates a permanent establishment there i.e. does working in your new home create a taxable presence there for your company?
As well as the tax risk itself, which will depend on the country of residence, the potentially more material risk is the due diligence risk i.e. getting the buyer of the business (and more likely their due diligence team) comfortable that there are not foreign tax issues that need to be managed.
