The UK is projected to see an outflow of 3,200 high-net-worth-individuals (HNWIs) in 2023, surpassing Russia’s 3,000, as per the Henley Private Wealth Migration Report 2023.
The report by the international residence and citizenship advisory firm, presents the latest figures on the inflow and outflow of dollar millionaires worldwide.
UK’s outflow will position the UK as the third-largest loser of millionaires globally, following China, with a net loss of 13,500, and India, with a net loss of 6,500.
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The projected HNWI flight from the UK is double that of the previous year, which witnessed a net exodus of 1,600 millionaires.
The data, projected by global wealth intelligence firm New World Wealth, tracks wealth migration trends.
The report focuses solely on HNWIs who have genuinely relocated, spending more than six months per year in their new country.
Australia is expected to attract the highest number of millionaires in 2023, with 5,200 individuals, followed by the UAE with 4,500, Singapore with 3,200 (its highest on record), and the US with 2,100.
Switzerland and Canada rank 5th and 6th, respectively, with Greece, France, Portugal, and New Zealand rounding out the top 10 countries for net HNWI inflows.
Israel is predicted to drop out of the top 10, experiencing a significant decrease in its net inflow of millionaires.
Why are wealthy people moving out of the UK?
The UK’s net outflow of HNWIs can be attributed to various factors, largely due to the consequences of Brexit.
The country experienced its peak net outflow in 2017 following the Brexit poll, which disrupted the previously positive inflows of HNWIs.
“The recent unsettling British ‘Non-Dom debate’ triggered by unprecedented political volatility, coupled with rising debt, a dysfunctional healthcare system, high crime rates, and a general sense of lingering malaise, has clearly tarnished the lustre of London,” Sunita Singh-Dalal, Partner, Private Wealth & Family Offices at Hourani said.
The removal of permanent non-domiciled taxpayer status has also made the UK less appealing to HNWIs, with the ability to move between the UK and EU countries becoming more challenging.
“Whatever one may think about the merits of Brexit, this cohort is voting with its feet. Coupled with the policy change to remove permanent non-domiciled taxpayer status, Brexit has made the UK less hospitable and welcoming to HNWIs. It’s now harder for them to move between the UK and EU countries. And evidence shows that the UK’s share of inward investment into Europe has declined since it left the EU, with Germany and France benefiting,” Prof. Trevor Williams, former Chief Economist at Lloyds Bank Commercial said.
Additionally, the UK’s share of inward investment into Europe has declined since its departure from the EU, benefiting countries like Germany and France, he added.
The United States is also witnessing a decline in its attractiveness to migrating millionaires, the Henley report said.
While it still maintains a net inflow of 2,100 HNWIs in 2023, this represents a massive drop from the 10,800 millionaires it gained in 2019. Higher taxes and other factors have contributed to this decline.
“In the past, America was the obvious destination for wealth migrations because of its technology, leadership, and much vaunted freedoms. Soon, however, the US could begin to resemble the UK, traditionally one of the top destinations for migrating wealth, but which is now experiencing a net exodus of HNWI migrants because of the economic impacts wrought by the own goal known as Brexit,” Personal finance columnist, author, and investment expert, Jeff D. Opdyke said.
China experiences ‘largest loss’ of millionaires
China continues to experience the largest net loss of millionaires annually due to migration.
Wealth growth in China has been slowing, which has had a considerable impact on outflows.
India’s net exit numbers are also expected to decrease in 2023, with tax legislation and complex rules on outbound remittances contributing to the trend.
However, the report saw a substantial increase in investment migration programme enquiries in the first quarter of 2023, driven mainly by Indians and Americans.
The top three investment migration programmes in terms of popularity are Portugal’s Golden Residence Permit Programme, Austria’s citizenship by investment offering, and St. Kitts and Nevis’s Citizenship by Investment Programme.
The report highlights the importance of political stability, low taxation regimes, and personal freedom in attracting HNWIs.
Countries with residence and citizenship by investment programmes continue to benefit from foreign direct investment and diversification of domicile portfolios.
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