Context Magazine

Home is where the hat is

Edition 2 - The family issue

High net worth individuals (HNWIs) are typically very mobile, often with multiple homes around the world. For many, this mobility and way of life will have been severely curtailed by lockdown. Here, we look at how the pandemic has changed behaviour and the trends most likely to stay.

The super-rich, whether for business or pleasure, are invariably on the roam. But how has the pandemic affected their lifestyles? And where exactly is ‘home’ now?

In the past 18 months, there has been an increase in ultra-high net worth individuals (UHNWIs) choosing to base themselves in homes previously only used for holidays, be they Mediterranean villas or south-east Asian beach homes. Knight Frank’s 2021 Wealth Report suggests that many are considering more secure ties to other countries, noting that, “nearly a quarter of UHNWIs are planning to apply for a second passport or citizenship – a remarkable 50% growth in a year”.

“A number of clients have remained surprisingly mobile throughout the last year and a half,” says Elizabeth Nicholas, a Senior Associate in the Private Client and Tax Team at Penningtons Manches Cooper. “Typically, these are clients who are working or running businesses; they have obligations to fulfil.”

Then there are clients who don’t necessarily have those working obligations but have family in different places. And there are those in the unfortunate position of finding themselves stuck in the wrong place. Nicholas explains: “I have clients, for example, who have unexpectedly been out of the UK for over a year. In their case, this is potentially helpful in terms of their UK tax position. Others have been forced to stay in the UK and have inadvertently been UK tax resident as a result, which has had unintended tax consequences for them and the trusts and other structures they are involved with.”

Kevin O’Shea, Executive Director at Julius Baer International, concurs: “Some clients have become unintentional tax residents in holiday home jurisdictions where lockdowns, restrictions in travel and fears over health have held them in place longer than originally anticipated. This has brought to the fore the importance of understanding both the tax landscape and visa requirements of both holiday home destinations and relocation jurisdictions.”

O’Shea has also seen clients’ priorities changing: “Pre-pandemic we would regularly see taxes feature highly as a key driver in relocation decisions, often at the expense of other factors such as local healthcare, proximity to family/friends, education, political/economic stability and infrastructure. Since the pandemic began though, these other factors have become increasingly important as clients have had to live with the decision of their lifestyle choice when relocating. This has led some to reconsider where they lay their hat and broadened the scope of potential jurisdictions to call home.”

Global spread

According to Penningtons Manches Cooper’s Hazar El-Chamaa, who is a Partner in the Immigration team: “There is a growing number of countries offering residence and citizenship by investment programs all competing to make their particular offering as attractive as possible.”

As Nicholas acknowledges, having more than one bolt-hole is often routine. “Personal and financial security are a concern for our clients. So, for them, having a global footprint is quite normal. This has not diminished even though we’ve been through a period where they’ve been more physically constrained than normal. Clients have certainly been impacted by the way different countries have implemented travel restrictions and they are looking at ways of managing this so that they can continue to operate in the way they always have done.”

“There is a growing number of countries offering residence and citizenship by investment programs all competing to make their particular offering as attractive as possible.”

“Some clients are looking at their own government’s handling of the pandemic and this is a factor for some when making the decision to move elsewhere,” El-Chamaa says.

While there hasn’t been a mass exodus of UHNWIs jetting to ‘Doomsday’ bunkers in New Zealand, Nicholas notes: “I think there will be some fallout: the pandemic might be the final straw for families choosing to leave or not to return.”

“Depending on what life stage they’re at, UHNWIs will have to consider investment and business opportunities, tax regimes, quality of education, where their friends are. Language and culture are also important,” adds Nicholas. Such familial factors could explain why there hasn’t been a huge uptake for the likes of the Barbados Welcome Stamp visa, or the Work from Bermuda Certificate, which both offer tax breaks to attract foreign entrepreneurs and ‘digital nomads’.

Decisions, decisions

The choice is now great, says El-Chamaa: “There are so many programs available, it’s best for people to consider which one suits them and their needs when considering other countries.”

El-Chamaa advises clients who want to come to the UK from the Middle East, the US, South America, India, Hong Kong and Russia.

“UHNWIs tend to come to the UK under the investor visa, as this visa route allows them to live in the UK with virtually no restrictions on what they can do here,” says El-Chamaa. “And similarly, when they’re looking to go elsewhere, and considering these citizenshipby- investment programs, this is what they are looking for – a visa or a passport that will give them the maximum freedom to travel; the visa that has the fewest restrictions and demands the least of them. For the UK, the investor visa requires an investment of at least £2 million in UK trading companies for a period between two and five years depending on how much they invest. There are cheaper alternatives of course but these do not give access to the UK.”

But before anyone thinks it’s as simple as jumping on a plane, El-Chamaa gives a word of caution: “You need to think about the fact that there are implications to buying property overseas or to relocation.” She highlights that tax considerations are often overlooked, sometimes until it is too late.

“It might be too early for people to really make any kind of sensible judgement about where to move to next,” says Nicholas. “There are all kinds of short- and long-term risks at the moment, including the potential for tax increases because of the economic crises caused by the pandemic.”

El-Chamaa agrees and emphasises that it’s important to work through decisions in stages: “Don’t start going to see schools for your children until you have properly explored the mechanics of your move to the particular country, the visa, the tax regime etc. Our private client team sometimes has to say, ‘Actually you need to wait, we need to organise this properly for you’. Make sure you’re doing your relocation properly.”


Among the southern European countries offering advantageous tax regimes to new residents, Italy has proved particularly attractive, including to those who were previously non-UK domiciled and paying tax on the remittance basis. The Lake Como area has been especially sought-after for its proximity to Milan, major airports and international schools.

The tax regime allows new residents in Italy to pay a fixed annual fee of €100,000 to shelter their foreign income and assets from other Italian taxes, including inheritance and gift tax. Nicholas says: “I don’t think people move to Italy only for tax reasons, but the potential tax savings under these programs have become an added bonus.”

“There are all kinds of short- and long-term risks at the moment, including the potential for tax increases because of the economic crises caused by the pandemic.”

Whether UHNWIs choose to linger longer in their sunnier bolt-holes or return to business hubs such as New York or Hong Kong may not be known until next year. “The full effect of this is yet to be seen,” says Nicholas. “It all depends on how people respond once their freedoms are returned to them.”

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Penningtons Manches Cooper LLP

Penningtons Manches Cooper LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority under number 419867.

Penningtons Manches Cooper LLP