Panel 1 - Update from the UAE & Saudi Arabia
A panel discussion on the opportunities and trends in the Middle East was the first order of the day at the HNW Advisor Conference on June 26 in London. Rightly so, given regional growth trends and with the UAE being the front runner for migrating high-net-worth individuals and businesses. The panel, comprising experts from various backgrounds, provided insights into changing client needs, the credibility, sophistication and track record of the UAE’s two financial centres, and the advantages of jurisdictions like the UAE in terms of regulation, privacy, and wealth management solutions.
The Key Points
The Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), are leading financial and wealth management hubs within the UAE, attracting a significant influx of high-net-worth individuals and businesses.
Factors driving this trend include the introduction of clear, progressive and future-thinking regulations housed in credible common law jurisdictions of the DIFC and the ADGM, the availability of sophisticated wealth management tools (such as foundations), and a focus on privacy and control for family offices and proprietary investment companies. These factors combined with advantageous tax policies, residency requirements, lifestyle, health and education options and access to neighbouring growth markets, make the UAE a stand-out choice for high-net worths and their families.
Opportunities exist for financial institutions, advisors, and structuring firms to establish a presence in the region and cater to the growing demand from clients, both local and international.
The panel discussed considerations for UK-based clients looking to relocate or establish a presence in the UAE, including the implications for tax residency, immigration, and the opportunity to maintain ties with the UK while optimising for the future in growth markets like the UAE.
The panel also highlighted the potential for cross-border collaboration and the symbiotic relationship between the UK and the Gulf region. The panel emphasised, the importance of leveraging the long-standing social and economic ties between the UK and the UAE to access growth opportunities in the Middle East.
“As the leading multi-service firm for high-net-worth clients and family offices in the UAE, M/HQ was honoured to lead the panel at the HNW Advisor Conference. The UAE is a fortress of opportunity for wealth migration, akin to a building with bricks. With world-class financial hubs like DIFC and ADGM, progressive regulations, and sophisticated wealth management tools, the UAE offers a robust and secure foundation for high-net-worth individuals and businesses. The UAE's favourable tax policies, privacy standards, and high quality of life make it an ideal destination. There are immense opportunities for financial institutions and advisors to establish a presence and capitalize on the thriving UK-UAE connection, building their own ‘brick houses’ in a rapidly growing market.” M/HQ
Panel 2 - Update from India for UK-connected clients
The panel discussion focused on the key drivers and considerations for Indian families looking to establish a presence or relocate to the UK. The experts provided insights on the primary motivations, such as education, lifestyle, real estate, and business opportunities, that are attracting Indian families to the UK. They also discussed the practical implications and challenges around immigration, tax residency, and wealth management for these globally mobile families.
The panellists highlighted the importance of navigating the complex UK immigration rules and the need for careful pre-arrival planning to ensure a smooth transition. They also explored the role of the UK as a family office jurisdiction, the use of trust structures, and the impact of the recent non-dom reforms on Indian families.
Additionally, the discussion touched on the UK's appeal as a hub for technology and innovation, as well as the legal and political stability that the country offers, which are key factors in attracting Indian entrepreneurs and businesses. The panel also delved into the banking and wealth management considerations, including the challenges around currency controls and the need for diversification across jurisdictions.
Overall, the discussion provided a comprehensive overview of the various factors and considerations that Indian families must navigate when establishing a presence or relocating to the UK, highlighting the evolving landscape and the need for expert advice and guidance.
Panel 3 - European Mobility Options - Italy, Monaco, Switzerland, Portugal
The transcription discusses the topic of relocation within Europe, particularly for high-net-worth individuals leaving the UK. The panel of experts provides insights on the key factors driving this trend, such as concerns over the UK's tax system, political and economic instability, as well as the availability of alternative residence and citizenship programs in other European countries.
The discussion covers the process of obtaining alternative residency or citizenship, the tax implications in various jurisdictions like Italy, Monaco, and Switzerland, and the complexities involved in properly executing an exit from the UK. The panellists emphasise the importance of seeking professional advice and carefully considering all aspects, including family circumstances, before making a decision to relocate.
Additionally, the panel discusses the UK government's proposed changes to the resident non-domicile regime and the potential impact on wealthy individuals and their structures. The experts highlight the need for a well-thought-out approach, as rushed decisions or poorly executed relocations can lead to unintended consequences.
Overall, the transcription provides a comprehensive overview of the current trends and considerations around high-net-worth individuals relocating from the UK to other European jurisdictions.
Panel 4 - US & Canada Update / Interaction with RND reforms
The transcription discusses the tax implications and planning considerations for US individuals residing in the UK. The panel of experts covers various topics, including:
The complexities of worldwide taxation for US citizens, including federal, state, and city taxes, and the ability to claim foreign tax credits.
The challenges of managing investment portfolios for US residents in the UK, such as avoiding passive foreign investment companies and utilizing US-compliant funds.
The use of insurance-based wrappers, such as deferred variable annuities and private placement life insurance, to mitigate tax issues for US persons in the UK.
The potential impact of the proposed changes to the UK's non-domicile rules on US individuals and the need to carefully evaluate their exposure to double taxation.
Opportunities for US persons to relocate to Canada and leverage the country's tax system, including the use of trusts and insurance policies to minimise taxation.
The discussion highlights the increasing complexity of cross-border tax planning and the importance of seeking advice from professionals who understand the nuances of both the US and UK tax systems.
Keynote Address
The speaker provided a detailed overview of the upcoming non-dom reforms in the UK, highlighting the need for reform, the issues with the current domicile and remittance basis system, and the key elements of the new rules. The main points covered include:
Removing domicile as a territorial connection for tax purposes and abolishing the remittance basis, with a new 4-year tax exemption for foreign income and gains for those who have been non-resident for at least 10 years.
A new 10-year inheritance tax test, with some transitional rules and potential issues around the commencement of the new regime.
Changes to the treatment of trusts, with protected and excluded property trusts largely being abolished.
A temporary repatriation facility allowing a 12% tax rate on remittances of foreign income and gains in the first 2 years.
Potential planning opportunities around delaying actions, using roll-up vehicles, and inheritance tax planning, though the speaker noted the new regime is generally more sensible than the current system.
The speaker also discussed the political context, the role of the Office of Budget Responsibility, and the likelihood of the reforms being implemented by April 2025 despite some wishful thinking that they may not happen. Overall, the presentation provided a comprehensive overview of the upcoming changes and their implications for non-doms in the UK.
Sponsor Introduction
The transcription discusses the use of life insurance for inheritance tax planning, particularly for high-net-worth individuals. Josh Harris, an associate director at Risk Assured, a leading provider of high-level life insurance, explains how their in-house underwriting process allows them to obtain better outcomes for clients compared to the traditional approach. He highlights the benefits of life insurance for inheritance tax planning, such as providing liquidity to pay liabilities, the multi-jurisdictional and portable nature of UK life insurance policies, and the quick payout before probate.
Kerr also discusses the pricing and flexibility of term life insurance policies, noting that they are often more cost-effective than whole-of-life policies for inheritance tax planning. He mentions that Risk Assured can also provide offshore policies for non-resident, non-dom clients with UK assets. The presentation also covers the potential impact of the proposed changes to inheritance tax rules and the importance of starting discussions with clients who are considering leaving the UK.
Overall, the transcription provides a comprehensive overview of the use of life insurance for inheritance tax planning, highlighting the advantages of the approach taken by Risk Assured and the various considerations for clients.
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