UK’s tougher stance on billionaires and sovereign wealth ‘risks further flight of super rich’

The UK taxman is to get up close and personal with more than 200 billionaires it has identified with a financial footprint in the UK, as authorities show little sign of trying to lure the wealthy back to Britain.

The HMRC tax authority announced in the wake of Wednesday’s budget that it is allocating a Customer Compliance Manager (CCM) to every identified billionaire as part of a crackdown intended to raise £500m.

Since the summer, it has been using “enhanced wealth identification approaches” that bring together data from across HMRC systems and third parties to provide a “more in-depth and holistic view of wealthy customers and their connected interests”.

It means it has identified a list of billionaires it believes are required to pay tax in the UK, regardless of where they live, to close the "wealthy tax gap" which in 2024-25 was £3.6 billion less than HMRC calculated should have been paid by those identified as wealthy – 1.3 million people with income over £200,000 or assets over £2 million in any of the last three years.

Chancellor John Healey’s maiden budget, coming days after the UK received praise from the International Monetary Fund for its fiscal discipline, offered local entrepreneurs financial perks but announced few measures to court ultra-wealthy people coming from Asia, Africa, Europe and elsewhere – despite the UK having explored steps to do so this year.

In fact, he has found a potential new source of revenue to bolster Britain’s tax take – the UK real estate portfolios of the world’s sovereign wealth funds.

Show caption: Canary Wharf in London. AFP

State-backed funds that were previously exempt from tax on rental income will now be levied at a rate of 15 per cent, according to documents published by the Treasury. The government expects the tax to raise about £700 million ($932 million) by 2029-30, the documents show.

The increased scrutiny on the super-rich, and on state-owned firms, risks further damaging Britain’s reputation as a place that welcomes wealth generators, experts have told The National. Since the budget of 2024, thousands of millionaires and above have left Britain for countries with more friendly tax regimes, such as Monaco and the UAE.

David Lesperance told The National that critical foreign direct investment was being discouraged through the new taxes.

Becky Fatemi, Executive Partner of UK Sotheby’s International Realty, said: “Britain cannot keep asking international wealth to come here while finding new ways to make investing less attractive. The proposal to remove long-standing tax exemptions for overseas sovereign wealth funds risks discouraging billions of pounds of investment at a time when we should be doing everything possible to attract it.

“Look at London's skyline. From The Shard to Chelsea Barracks, international capital, particularly from the Middle East, has helped transform entire neighbourhoods, create jobs and support the wider economy. These are precisely the investors we should be encouraging to put more money into Britain, not giving reasons to look elsewhere.

“The consequences could extend well beyond commercial property and development. Investment and residency often go hand in hand at the very top of the market. If wealthy international investors no longer see Britain as an attractive place to do business, why would they choose to establish their homes and family lives here? That has obvious implications for London's super-prime residential market.”

Show caption: The UK Chancellor, John Healey, holds up the red box in Down…

HMRC said some wealthy customers have affairs spanning multiple taxes, entities, investments and jurisdictions, or involving significant transactions and changes in circumstances. “As complexity increases, it can be harder for customers and HMRC to maintain a joined-up understanding of tax affairs. Billionaires can present a particular example of this … a greater need for early and co-ordinated engagement,” it said.

Ms Fetami said: “Of course everyone should pay the taxes they owe, but it reinforces a growing perception that this government is intent on coming after wealth rather than attracting it. That's a dangerous reputation for Britain to develop when internationally mobile families have so many other options.

“The real danger isn't just losing future investment. It's losing the families, businesses and property purchases that would have come with it.”

Iain Tait, head of the private investment office at wealth-management firm W1M, said: “In the deeply volatile world that we live in at the moment, we could have the UK looking like a beacon of stability. And we’re missing that opportunity.”

“What the budget does is reinforce the perception that the UK’s tax environment is becoming less favourable for building and passing on wealth,” said Harinder Hundle, managing partner at Hundle, a multifamily office. “For families with substantial pension assets, private businesses or international lives, it may accelerate decisions already under consideration.”

State property

State-backed investment firms from abroad – currently exempt from taxes on income from rental properties in the UK – are now in the government’s crosshairs for a levy of 15 per cent. Those include parts of the high-end fashion district of Regent Street and the Canary Wharf financial quarter, expanding Britain’s focus on overseas investors’ financial affairs.

UK real estate has been a magnet for the world’s largest sovereign investors, with large areas of London held by the funds. Norway owns most of Regent Street and has stakes in Covent Garden, Soho, Chinatown and Mayfair, while the Qatar Investment Authority is a joint owner of Canary Wharf Group.

“Sovereign wealth funds have played an enormously important role in financing major UK infrastructure, property and regeneration projects, many of which might never have happened without their backing,” said Rob Williams, partner at the tax advisory firm WTS UK. “The Qatar Investment Authority’s investment in Canary Wharf is just one example.”

The Office for Budget Responsibility, which publishes assessments of the government’s tax plans, said its estimates for how much revenue will be generated include a behavioural effect if the impacted investors restructure their assets, increasing leverage, and an attrition adjustment. However, it said the “costing is deemed highly uncertain” because of a lack of data.

Show caption: Nassef Sawiris, Egypt’s second-richest person. Getty Images

The change was “significant and unexpected,” said Zoë Arnautov, partner and head of tax at Simmons & Simmons.

Previous changes to capital gains tax on property sold by overseas investors resulted in behavioural changes, said Charlie Ferguson-Davie, chief executive and chief investment officer at Moorfield Group. “It had quite a significant impact on those investors who don’t have to pay that tax domestically, for instance, endowments and charities,” he said.

A representative for QIA declined to comment. Norway’s wealth fund did not immediately respond to a request for comment.

The moves show how Britain is continuing to reshape its relations with the global elite after the Labour government, which is now headed by Prime Minister Andy Burnham, introduced tax reforms under his predecessor in April 2025 for well-heeled residents originally from overseas and dented the nation’s long-standing wealth-hub status.

At last year’s budget, when Rachel Reeves was still chancellor and Keir Starmer prime minister, the government sought to curb the impact of the reforms first proposed in early 2024 by the Conservative Party, which was then still in power. Both before and following the measures taking effect, a steady stream of billionaires have continued to leave Britain. Some of them have subsequently closed down their firms and put their luxury homes up for sale in the UK as they build new lives elsewhere.

To boost its appeal to globally mobile people, the UK announced on Wednesday it would move ahead with plans for a foreign tax credit to help curb punitive tax rates for British residents receiving income from US entities. That measure removes a barrier for people relocating to the UK when the policy comes into effect from 2028, the year before the UK must hold its next general election.

Show caption: Swiss tech billionaire Guillaume Pousaz. Getty Images

But before that, months of speculation over higher capital gains taxes in the lead-up to the budget have left a wave of UK entrepreneurs seeking to sell stakes in their firms before any change came in. In his budget, Mr Healey announced preferential tax treatment for certain stake sales by founders of businesses starting next year, but those already with a transaction under way are likely to miss out.

Nassef Sawiris, Egypt’s second-richest person, and Swiss tech billionaire Guillaume Pousaz have been among the super-wealthy people relocating from the UK as the nation brought in tax hikes for non-domiciled people who contributed more than £9 billion annually to the UK economy.

Some home-grown British billionaires such as hedge fund founder Chris Rokos are also exiting after facing higher levies and fearing further attacks on their wealth. The financier is relocating to Greece, which brought in its own preferential tax regime for wealthy foreigners almost a decade ago, partly styled on Britain’s now-defunct, centuries-old system for so-called “non-doms”.

Meanwhile, his fellow British billionaire Richard Desmond has restructured his fortune to help him expand his investments outside the UK after shifting residency to the UAE last year. That move illustrates the knock-on effects from ultra-wealthy people transferring to other territories.