Wealth planning in the shadow of UK tax reform

Ritchie, senior director of wealth planning at RBC, suggests that clients should avoid knee-jerk decisions despite rising anxiety over potential changes to inheritance tax and the broader fiscal landscape. With total inheritance tax liabilities climbing to £7.03 billion in 2023/24, the pressure on estates is mounting. The nil-rate band has remained frozen at £325,000 since 2009, effectively pulling more families into the tax net through fiscal drag.

For many, the focus remains on traditional mitigation strategies, such as gifting or establishing trusts. While individuals can pass on up to £3,000 tax-free annually, the seven-year rule on gifts remains a critical hurdle for estate planning. Ritchie notes that even home gifting carries complexities, particularly regarding reservation rules that require rent payments to maintain legitimacy. Beyond standard tax planning, philanthropy is increasingly used by wealthy individuals to align their assets with personal values, such as climate initiatives.

Relocation planning has also moved to the forefront following the abolition of the UK’s non-domicile regime. HMRC data indicates that approximately 9,000 taxpayers left the non-dom population in the year ending 2025. Industry observers warn that the new Foreign Income and Gains (FIG) regime may not be enough to retain globally mobile wealth creators. Mark Jephcott of Utmost noted that the combination of a less attractive tax environment and broadening inheritance tax scope risks driving away the very individuals who serve as the largest contributors to the UK tax base.