Source: iNews
Estate agents have suggested that some rich Britons are looking to leave the UK for Europe after the Budget
Property prices in Portugal, Italy and Switzerland are rising as more Brits move abroad, with higher UK taxes expected to be a factor, estate agents said.
One of the main reasons that wealthy foreigners are relocating to such parts of Europe are the “security, lifestyle and greater weather”, an agent told The i Paper, adding rising taxes could also be an influence.
Under the UK’s existing tax system, “non-doms” – residents whose permanent home for tax purposes is outside the UK – benefit from a regime that means they pay tax on their overseas earnings only if they bring the money into the UK.
In his March 2024 Budget, former chancellor Jeremy Hunt announced that he would scrap this system.
Labour pledged to go even further in its election manifesto and close loopholes for non-doms, such as for inheritance tax (IHT). Reeves confirmed in her Autumn Budget that she would abolish the non-dom regime from April this year.
Estate agents and other experts told The i Paper that this could be one of the reasons that more rich Brits are looking to move to European countries.
Portugal, in particular, has grown in demand, with house prices rising by more than 60 per cent from mid-2019 to mid-2024, according to the National Statistics Institute.
Experts say the market shows no sign of slowing, with the latest data showing that house prices rose by 9.8 per cent in the third quarter compared to the year before.
Zoie Hawker, managing partner of Fine & Country in the Algarve, Portugal, said: “We are still experiencing strong demand from the UK. We have sold to buyers from 32 different countries over the last two years and the UK remains our largest market.
“The main reasons that wealthy foreigners relocate to Portugal are security, lifestyle and greater weather. There is a new scheme offering lower tax rates to certain categories of skilled professionals, which has made the country quite attractive, too.”
She said that property prices are on the up due to both increase demand from countries including the UK and a general shortage of supply.
Prices increased by 9.4 per cent last year across the Algarve region, which has a lot of holiday homes, she said. But in the domestic market, increases were higher, adding: “We expect similar increases this year.”
Meanwhile, the Swiss National Bank recently published figures for July to September last year, which recorded a 4.79 per cent year-on-year increase on privately owned apartments.
Beat Hartmann, director of Hartmann Singleton – a property acquisition company in Switzerland – said: “We have seen an increased demand from the UK for people wanting to move to Switzerland, especially since the last election.”
Property prices in Switzerland are among the highest in the world, and there are places where you can arrange a lump-sum tax agreement.
This means it uses the taxpayer’s annual living expenses to base tax on, rather than global income and wealth.
Mr Hartmann added: “The property market in Switzerland has been very stable, and with interest rates being much lower here than in the UK, finance for wealthy people is plentiful.
“Our clients tend to stick to luxury resorts with international schools nearby, such as Gstaad and Geneva, and look for communities with the lowest taxes to pay.”
Italy’s housing market has also improved and house prices rose by 2.2 per cent over the same period with an increase in demand and more houses gradually being built.
In contrast to the UK’s system, Italy introduced a tax system designed to attract wealthy internationals in 2017.
Initially, people with overseas wealth living in Italy paid a flat tax of only €100,000 (£82,995), regardless of how much they earned overseas.
Last year, Giorgia Meloni, the Italian prime minister, raised this to €200,000 (£165,984), but it is still cheaper than staying in the UK for many.
Rowan Morrow-McDade, tax director at Alexander & Co chartered accountants, said: “The first Labour Budget was seen as penal to many UK taxpayers. Following this, we have seen a number of high-net-worth clients looking to move to overseas.
“Unsurprisingly, other countries are only too happy to accept them. Both Spain and Italy have specific schemes to entice high net worth individuals to their jurisdictions.
“If there are further penal changes in future Budgets, it is likely this trend will continue.”
Higher capital gains tax encouraging move
It’s not just non-doms who may be tempted to move abroad. The impact of frozen income tax and higher capital gains tax could also be one reason people opt to leave the country.
Asad Khan, international property investment businessman, said: “The UK government has introduced policies that affect higher-income earners, such as the freezing of tax thresholds, so this has led many Britons to consider relocating abroad.
“In particular, the income tax rate has increased on those earning over £125,000, and the personal allowance, which reduces the amount of income taxed, has been frozen. This can result in individuals paying more tax than before without an increase in their earnings. Britons in this bracket may find it appealing to move to countries with lower tax rates in Europe for high earners.
“Capital gains tax [CGT] is also set to increase, which will make it more expensive for individuals to sell assets like properties or shares. Moving to a country with a lower CGT rate could be financially advantageous for those affected.”
Jason Hollands, managing director of Evelyn Partners, added: “Particularly in the run up to the last Budget we saw evidence of wealthy clients, including business owners, explore potential options for redomiciling abroad, especially to jurisdictions offering incentives such as golden visa schemes. A key driver at the time was concerns about potential steep rises in capital gains tax.”
Additionally, as the UK has one of the highest IHT rates in the world, and with the thresholds and exemptions being frozen, more estates will be caught in the IHT net, especially as property values continue to rise, which could lead to more people looking to move.
Those who have saved substantial amounts into pension pots are also exploring countries where pension savings are not taxed as much or where they can access their retirement funds more flexibly.
A Treasury spokesperson said: “Keeping the UK internationally competitive, our main CGT rate is lower than any other G7 European country – including Italy – and lower than Portugal’s, and our new residence-based regime is simpler and more attractive to new arrivals than the non-dom regime it replaces.
“It means our tax system is fair and progressive, keeping the UK an attractive place to live while supporting the public investment needed to drive growth.”
