The recent UK Spring Budget revealed Conservative Government proposals to amend the tax rules for so called ‘non-doms’, with the changes meaning that those resident in the UK beyond four years will be subject to many of the same tax obligations as individuals without the special status.

On the one hand, it is not unreasonable to assume that announcing wholesale changes like this may well, at best, prompt those affected to revisit their residency situation and, at worst, prompt an exodus.

Although the Government estimates that the changes will actually add to public revenues, this is uncertain and will depend greatly on the reaction of the non-doms to the proposed changes and any potential exits to other jurisdictions.

Of course, with the prospect of a general election in the UK on the cards this year and with Labour also announcing similar plans, with further tightening of the rules, we will need to see what arises once the election takes place – but nevertheless, it’s an interesting development that raises questions around the motivations of wealthy individuals and families when it comes to international mobility.

Could it be that, despite popular rhetoric, the residency decisions of ultra-high net worth individuals and families are about more than just tax?

Why should HNWs look to Jersey?

Recent instability – in both an economic and geopolitical sense – has propelled jurisdictions such as Jersey into the consciousness of HNW individuals and families, owing to Jersey’s recognised reputation, expertise across financial services and certainty it offers international clientele.

Tax is simply not the driver it once was, with such clients actively seeking solid, stable, reputable jurisdictions that can also offer flexibility of structure and the expertise of personnel to ensure arrangements are managed effectively.

From a regulatory perspective, there is also impetus to operate from international finance centres that hold up well to scrutiny while still maintaining a commercial and innovative mindset.

In this regard, Jersey has much to offer having long been recognised as one of the world’s most stable and successful IFCs, emerging from reviews in recent times by the International Monetary Fund (IMF), the Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD) with its reputation enhanced.

And, while the Island is currently awaiting the findings of a MONEYVAL review conducted last year, in its last assessment the Council of Europe’s anti-money laundering committee of experts found Jersey was ‘compliant’ or ‘largely compliant’ with 48 out of 49 FATF recommendations, placing it in the top tier of jurisdictions.

Wealth structuring has become more complex

The complexity of the environment families now operate in has also put a number of different and evolving factors on the table when it comes to decisions around where to structure their wealth and where to call home.

The role of the next generation, geographically dispersed family members, the broadening of business activities, the diversification of investments, digital assets, ESG and philanthropy are all shaping decisions in the private wealth world.

As a result, clients with an international outlook are demanding jurisdictions with an established legal framework, cross-border capabilities, and recognised reputation as an IFC of excellence, supported by their political and economic stability, as well as certainty.

Transparency is also a key area with exchange of information agreements a factor as well as modern clients’ desire to be seen to be doing the right thing.

In addition, technology and innovation are only set to increase in significance with digital platforms and connectivity playing a key role in the minds of families. In our experience, the fact that Jersey benefits from the fastest broadband speeds in the world is something that is not lost on the families looking for an IFC partner.

Stability is key for HNW global mobility

When it comes to residency and wealth structuring, the increasingly global nature of family ambitions has moved the dial away from tax significantly, freeing HNW individuals and families to choose where to reside according to their personal needs and preferences.

As such, changes to rules like the UK’s non-dom regime is not really about tax, it’s about change and the complexity and uncertainty that brings.

By combining substantive international capabilities with an innovative mindset and the key ingredient of stability, jurisdictions like Jersey can complete an attractive part of the puzzle.