HNW Litigation & Advisory Magazine Tax Issue 2026

INTRODUCTION

This edition of HNW Tax reflects a private client landscape shaped by change, complexity, and heightened client expectations. Across jurisdictions and generations, advisers are being challenged to rethink established structures while remaining grounded in sound planning principles.

We explore the strategic value of philanthropy, the realities of global mobility, and the risks facing internationally mobile families who move without fully understanding their tax exposure. From U.S. citizens in the GCC to the role of Malta in modern structuring, cross-border planning remains firmly in focus.

Several articles address the impact of policy change on long-standing arrangements, from trusts and pensions to wider estate-planning strategies. Others examine alternatives to traditional trust structures, alongside jurisdiction-specific considerations such as Scottish succession rules.

Importantly, this edition also looks beyond technical solutions. Contributions on death planning and post-death practicalities remind advisers that emotional awareness, clear communication, and orderly execution are essential to preserving family wealth and avoiding unnecessary disruption.

Taken together, these articles reinforce a central message: effective high-net-worth planning today demands not just technical expertise, but adaptability, judgement, and a clear understanding of what matters most to clients.

The ThoughtLeaders4 High Net Worth Team

Paul Barford Founder / Managing Director 020 3398 8510 email Paul

Danushka De Alwis

Founder / Chief Operating Officer 020 3580 5891 email Danushka

Yelda Ismail Group Marketing Lead 020 3398 8551 email Yelda

Dan Sullivan

3059 9524 email Dan

Chris Leese Founder / Chief Commercial Officer 020 3398 8554

email Chris

James Baldwin-Webb Director, Private Client Partnerships 07739 311749

email James

Rachael Dinneen Strategic Partnership Manager - Private Client 020 3398 8560

email Rachael

Jamie Biggam

CONTRIBUTORS CONTENTS

Lacie Riseborough, Charities Aid Foundation (CAF)

Phineas Hirsch, Payne Hicks Beach

David Kilshaw, Rothschild & Co

Stacy Lake,

UNLOCKING THE PHILANTHROPY ADVANTAGE

ADVISERS WHO OVERLOOK CHARITABLE GIVING MISS VALUABLE OPPORTUNITIES BY CONVERSATIONS

Philanthropy is growing in importance among high-net-worth (HNW) individuals. But many professional advisers are not making the most of the opportunity it offers to build relationships with clients. Recent research we carried out at the Charities Aid Foundation (CAF) reveals a significant disconnect; only 36% of advisers believe it is important to discuss philanthropy with clients, while 60% of HNW individuals want these conversations. The vast majority of HNW individuals donate to charity – giving around £8bn annually. So advisers who overlook this topic could fall short of their client expectations.

This research from our latest report, The Philanthropy Advantage: How Advisers Can Empower Client Giving, found that wealthy individuals are much more likely to donate than the rest of the public, and for many it is an important part of their lives.

However, many advisers admit they wait for clients to raise the topic rather than initiating it themselves. This passive approach means advisers may miss the chance to support clients’ philanthropic

ambitions. It is impossible to predict who will be interested in givingsometimes the most commerciallydriven clients are the most generous donors. We therefore cannot make assumptions about who would want to discuss philanthropy.

In fact, when giving is discussed, the vast majority of HNW individuals (93%) say that they found it beneficial. Even those who haven’t had these conversations are open to them, with three quarters (76%) saying they would welcome their adviser raising topics including causes they are passionate about, the tax benefits of giving and how to ensure a charity is legitimate.

Furthermore, it is a central part of wealth planning. Gift Aid is well understood with regards to cash donations to UK charities, but it is not the only tax relief available. Donations of assets such as land, property, art or shares can qualify for Income Tax, Capital Gains Tax, or Inheritance Tax Relief, depending on the type of gift and the donor’s eligibility. CAF handles around £40 million worth of donated shares from our clients annually and accepted a range of other assets,

from famous artworks to commercial and residential property.

Despite the many considerations from a tax perspective, it is telling that almost two-thirds of HNW giving could be happening without professional guidance. Only around a third of HNW donors (36%) have discussed the tax efficiency of their giving with their financial adviser in the past two years. Selecting the right assets to donate, and timing donations around wealth events are just two ways you can make sure donations are as valuable as possible.

Philanthropic conversations go beyond tax and compliance. It is about more than just money - it is about meaning. Giving can be deeply personal, and in wanting to create impact, HNW clients often look for guidance to do it well.

This is a valuable opportunity to build stronger relationships and offer support that goes beyond traditional financial advice. This doesn’t mean you need to be an expert. By asking thoughtful questions, bringing philanthropy into planning conversations, and being aware of tax-efficient options, you can help clients achieve their goals and make a real difference. Starting the conversation could be the first step towards turning wealth into purpose.

At CAF we regularly work with professional advisers to help manage clients’ giving and provide the additional philanthropic expertise required.

One of those advisers, Nick Wood, a Partner at Sarasin & Partners, explains how timing can be crucial when discussing giving: “By anticipating the scenarios and life events that may present opportunities for philanthropy, portfolio managers can start conversations earlier about what is most important to their clients on a personal level, and thereby truly understand their long-term investment objectives. Having timely conversations with clients, to ensure that their philanthropic assets

The personal element of giving is an adviser’s opportunity not only to develop a deeper relationship with existing clients, but also their families and therefore potential future clients. As we continue to navigate the greatest ever transfer of wealth, advisers must consider how they are engaging with younger generations and their needs as well. Giving is often a family affair and by starting these conversations early, you have greater opportunity to connect and demonstrate your value. Research suggests next generation HNW individuals are highly likely to seek new advisers; with this generation also increasingly focused on impact capital, philanthropic conversations are an ideal client engagement tool.

Jennifer Le Chevalier, Director of Private Wealth at IQ-EQ explains the interplay between family and philanthropy in her conversations with clients: “As a trustee, philanthropy and

Ultimately, our research shows that HNW donors want to discuss charitable giving with their advisers but it is not as common as it should be. That’s why we would like to see the FCA set out a plan for how all regulated financial advisers could receive training on philanthropy; to increase the number of these conversations, as well as the quality of advice clients are receiving. In the meantime, we continue to offer sessions with advisers to help them increase their knowledge and confidence around the topic.

High-quality philanthropic advice is a win-win: clients receive the guidance they need to make a difference, and advisers deepen their relationships and futureproof their business.

I think that Adriana Lowe, who leads on private client engagement at CAF, sums it up well: “If you want to get to know someone, ask them if they give to charity. It is incredible how animated and open people are when they talk about the charities

FICS AND FLPS, RATHER THAN TRUSTS?

ALTERNATIVE GOVERNANCE STRUCTURES FOR PASSING GENERATIONAL WEALTH IN THE UK

Authored by: Phineas Hirsch (Partner) & Tess Hulton (Associate) - Payne Hicks Beach

Tax experts Phineas Hirsch, Partner, and Tess Hulton, Associate, at Payne Hicks Beach, explore UK succession planning alternatives to trusts, highlighting taxefficient options such as outright gifts, family investment companies and family limited partnerships.

For many high and ultra-high net worth families, the word ‘structure’ still instinctively means ‘trust’. Over the years, the tax benefits of onshore trusts have gradually been eroded. UK trusts now sit within a tightly defined inheritance tax (“IHT”) ‘relevant property regime’ that can impose entry, exit and ten-year anniversary charges. Combined with political scrutiny, increasingly onerous disclosure requirements, and the risks of further changes to the IHT regime, many families are rightly asking: what are the alternatives?

We highlight below a selection of alternatives to establishing a trust which, when properly utilised, can form an effective way of passing generational wealth in the UK. While trusts remain valuable structures

for many families, they are now one option in a broader structuring landscape, rather than necessarily the ‘go to’.

1. Outright Gifts

The simplest option is no structure at all: direct gifts to the next generation.

Lifetime gifts between individuals are not subject to IHT provided the donor survives the gift by 7 years (known as the “7 year rule”). If the donor survives for at least 3 years from the date of the gift but dies within 7 years, taper relief progressively reduces the rate of IHT down from 40% to zero, with each additional year that passes.

Outright gifting remains an effective way of passing wealth down generations, particularly when combined with other planning (such as with life insurance over the 7-year period or by putting in place a family constitution). The limitations, however, are obvious: outright gifts expose assets on divorce, to creditors, and to mismanagement by the recipient, and cannot be ‘recalled’ if family circumstances change. And

fundamentally for business owners and founders, an outright gift without any structuring can lead to a loss of control over the assets or business for the donor.

2. Family Investment Companies (“FICs”)

A FIC is typically a UK limited liability company, funded by way of a loan by the senior generation. Through the use of different share classes, the senior generation can retain control (by holding voting shares and so controlling loan repayments), with younger generations holding non-voting shares. When properly utilised, these structures can be used to pass significant assets (and future growth) down generations without passing on control.

FICs benefit from corporation tax rates, rather than the historically higher rates of income tax, as well as an exemption from tax on dividends received in respect of underlying investments. Value can be ‘rolled up’ in the structure without being subject to income tax or capital gains tax in an individual’s hands.

If cash or assets not standing at a gain are transferred into the company, there should be no tax on set up, though the eventual extraction of funds through dividends to shareholders can trigger tax.

IHT planning can be effected by gifting shares in the FIC. The value of the gifted shares will fall out of the donor’s estate for IHT purposes if they survive the gift by 7 years and the value of the retained shares can also benefit from discounting for fractional ownership. Unlike trusts, FICs do not suffer entry, exit or ten-year anniversary IHT charges simply by existing; the trade-off is increased corporate administration and compliance, and there is less flexibility than a trust affords to reallocate value among a class of beneficiaries.

3. Family Limited Partnerships (“FLPs”)

FLPs offer a useful alternative, particularly where shares are being transferred rather than cash. FLPs are often preferable to FICs where an individual wishes to pass wealth to future generations while continuing to receive profits on a regular basis.

An FLP involves a general partner – a corporate vehicle controlled by the senior generation – and limited partners, typically younger family members. The general partner retains all decisionmaking powers, while limited partners hold the economic value.

Gifting partnership interests in the FLP to the younger generation enables assets to pass without loss of control for the donor. The structure also offers flexibility, as new limited partners can be added as family circumstances evolve.

FLPs are tax transparent, so income and gains are taxed directly on partners as they arise – but with the advantage that there is no further taxation on extraction of value from the structure to limited partners. Like FICs, a gift of partnership interests will be subject to the ‘7 year rule’ but otherwise will pass free of IHT, and will not be subject to periodic IHT charges that apply to trusts.

4. Hybrid Structures

combining features of FICs and FLPs, can also be appropriate for certain UHNW families, to manage income tax exposure and benefit from the dividend exemption without increasing the rate of CGT on gains.

The Current Landscape

Recent changes to the UK’s tax regime have caused HNW and UHNW individuals to refocus on how they can structure their assets to provide protection from future changes. In particular, drastic announcements in recent Budgets have created concerns about holding assets outright. Owners of business assets which have until now qualified for 100% IHT Business Property Relief will be faced with IHT exposure from April 2026, if they do not take steps before then to make lifetime transfers of those businesses – whether structured to ensure governance and control, or not…

Against that backdrop, the most valuable feature of any structure is often optionality:

• the ability to adjust economic interests between branches of the family without triggering disproportionate tax charges; and

• the separation between control, legal ownership and economic benefit.

Trusts remain a sophisticated and, in many cases, indispensable part of this picture. But for many UHNW families, family investment companies and family limited partnerships now share the stage.

The art lies in selecting and, where necessary, combining structures to align with a particular family’s vision, values, risk appetite and jurisdictional footprint, while keeping a prudent eye on the evolving UK tax landscape. The structures may be technical but the objective is simple – to pass wealth securely from one generation to the next, with no more tax impact than the law requires.

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NO 2026 BUDGET SPECULATION

PLEASE!

One of the more unpleasant memories of 2025 (at least from the tax perspective) will be the sea of speculation which swamped the Chancellor’s November Budget.

The position was admirably summarised by Paul Johnson, formerly of the Institute of Fiscal Studies:

“… we get damaging speculation, damaging to individuals, damaging to the country.

It shouldn’t be allowed”. We are unlikely to be able to rely on the politicians to change their behaviour, so it is incumbent on us all as professionals (be that tax advisers, trustees, lawyers or, as in my case, wealth planners) to help clients avoid a 2026 version of the damaging speculation.

We can do this in 2 ways.

The first is by avoiding the temptation to be drawn into Budget speculation. Don’t add fuel to the bonfire. Clients worry and so the temptation to comment is there – but there are better ways of helping clients , as I will go on to discuss.

In this context, a special mention must go to Peter Vaines of Counsel (Field Tax Chambers) who, at the height of the 2025 nonsense, had the courage to say (and in writing at that):

“In response to numerous enquiries, I would just like to say that I do not have the faintest idea about what Rachel Reeves will do in the Budget. Not a clue. There is lots of press speculation on all sorts of things, some of which might be vaguely reasonable and some of which is plain bonkers.”

What a sound opinion. Some commentary on Budget speculation is

necessary, and clients want guidance and assurance from their advisers, but this need not feed the chaos we all suffered in 2025. Insightful comment, yes: shallow speculation, no.

The second way that those of us in the advisory community can help quell damaging speculation is by helping drive positive client behaviours, and the present fiscal regime encourages the approach.

The last 15 plus years have seen a dramatic change in tax planning. It used to be much more a seasonal game of ‘cat and mouse’ – a tax avoidance idea would flourish, be closed by legislation and a new version would emerge and the process repeated. However, case law, anti-avoidance legislation and client appetite has all changed this.

There is now much less annual or ‘one off’ tax planning. We are in a new era where stability and long term solutions are key.

The modern focus is on stable solutions, designed to last across generations, like family investment companies, re-emerging family partnerships and ‘wrappers’ such as OEICs and offshore bonds. Families are increasingly using structures which have a strong and robust tax footprint and are in line with HMRC thinking.

The growth in life assurance as a ‘centre of table’ solution is another example of this shift towards durable solutions which are less at risk of legislative change and (as illustrated by the growth in ‘wrappers’) tax hikes.

The emphasis on long term planning is also evidenced by the increasing focus on family governance and family constitutions. The role of advisers in supporting clients on the wider aspects of succession planning is growing, with some firms now bringing in psychologists and like professionals to support their clients: a trend one might expect to grow.

This shift in thinking is important, and we should encourage clients to benefit from it. They should take time to plan for a long horizon and invest in structures which can ride across changing tax laws.

Having taken the time to work with their advisers to get ‘earthquake’ proof solutions, clients should be encouraged by their advisers not to be swayed by annual Budgets or press speculation. Modern structures are for the long term and while annual maintenance reviews are wise, knee-jerk reaction to Budget speculation is not.

The structures of today should be ‘classics’ not at the whim of whatever a Chancellor may decide upon the morning of a Budget. The duty on advisers is to help clients plan for the long term and to be quietly confident in their solutions when a Budget arrives.

I am fortunate that I spend a lot of my time working alongside lawyers, tax advisers, trustees and others and see the depth of learning and wisdom available to clients. That depth can hopefully silence the unwelcome sounds of Budget 2026 speculation.

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TRUST AND ESTATE PLANNING IN A CHANGING TAX ENVIRONMENT

The most striking feature of UK trust and estate planning in 2026 is not any single legislative reform, but a shiftaccelerated over the last two years - in the assumptions on which planning has traditionally relied. Concepts that once provided relative stability such as domicile, excluded property trusts, and the treatment of pensions outside the inheritance tax framework no longer operate with the same predictability. Outcomes are now more clearly shaped by the interaction between residence, relief conditions and timing.

This has altered not only the technical analysis, but the nature of advice itself. Estate planning has become less about identifying a single optimal structure and more about exercising judgement over time: anticipating movement in residence, assets and legislation, and ensuring that arrangements remain capable of adapting as circumstances change.

Old Anchors, New Constraints

Domicile

For many years, domicile operated as the principal organising concept for internationally connected clients. While often complex in theory, it was relatively stable in practice. Once established, it allowed advisers to ring-fence non-UK assets and plan with a degree of longterm certainty.

That certainty has now diminished. Long-term UK residence has replaced domicile as the primary organising principle for inheritance tax, shifting the analysis from a durable legal status to an assessment of residence patterns over time. Advisers must now consider cumulative residence history alongside the client’s current position and likely future movement when evaluating exposure.

Excluded Property Trusts

Other long-standing assumptions have weakened in parallel. Excluded property trusts, once treated as settled solutions once established, are now assessed by reference to current facts rather than historic classification.

The analysis has shifted from whether assets were excluded at the point of settlement to how the settlor’s ongoing

residence status affects exposure over time. For many legacy structures, this has converted what was once a binary assessment into an ongoing monitoring exercise, with residence changes capable of altering the inheritance tax position long after settlement.

Pensions

A similar reassessment is now required in relation to pensions. From 6 April 2027, most unused pension funds and pension death benefits will fall within the scope of inheritance tax. This marks a clear departure from the long-held assumption that pensions sit outside the estate for IHT purposes.

Pension wealth can no longer be treated as a residual planning pot to be preserved indefinitely, and advisers must now revisit beneficiary nominations, trust arrangements and the sequencing of asset consumption during lifetime, balancing inheritance tax exposure against income tax and longevity risk.

APR and BPR

Reliefs, too, have become more constrained. Agricultural and business property reliefs continue to play a central role in succession planning, but from 6 April 2026 operate within a collective capped framework. Whereas qualifying assets previously benefited from 100% relief without a monetary

limit, each estate will now benefit from a single £2.5 million allowance, applied across qualifying APR and BPR assets combined, qualifying for 100% relief.

Value above that threshold will typically attract only 50% relief. While the allowance is transferable between spouses and civil partners, partial exposure above the cap is now a common outcome rather than an exception.

Taken together, these changes mean that estate planning can no longer assume insulation from charge. Partial exposure is now a feature of planning rather than a failure of it, requiring governance and liquidity to be addressed at the design stage.

None of these concepts has disappeared entirely. They remain relevant but no longer operate as standalone solutions.

How Outcomes are Now Determined

What now distinguishes estate planning outcomes is not the presence of individual rules, but the way in which multiple variables operate together over time. Exposure is rarely driven by a single status, relief or decision. Instead, it arises from how factual circumstances and available reliefs align at the point when tax is tested.

Timing acts as a critical overlay. The same transaction may carry materially different consequences depending on when it occurs - before or after a change in residence, before or after relief limits are exceeded, or before or after legislative change. In this environment, sequencing and context have become as important as structure.

The practical consequence is that outcomes are no longer linear. They cannot be predicted by reference to one factor alone but depend on how multiple considerations align when exposure crystallises.

Trusts in a JudgementLed Environment

Trusts remain a central feature of estate planning in 2026, but their role has shifted. They are less reliable as tax shelters and more significant as governance frameworks. The question is no longer whether a trust is technically effective, but whether it continues to serve a defensible purpose in light of current and anticipated facts.

The historic emphasis on whether a trust was excluded property when settled has given way to a more dynamic enquiry: how does the settlor’s current status interact with the trust now, and how might that interaction change? Structures that rely on historical classifications rather than present reality are increasingly fragile.

This places greater weight on matters that were once secondary. Governance is no longer merely administrative; trustee decision-making, investment policy and record-keeping increasingly influence whether outcomes are sustained or challenged. The ability to demonstrate rationale and process now carries materially greater weight alongside the robustness of the trust deed itself.

Liquidity and Flexibility Reconsidered

As reliefs narrow and pensions move within scope, liquidity has returned to the centre of estate planning. Partial exposure is now common, and estates must be capable of funding tax liabilities without forced asset sales or disruption to ongoing commercial operations.

Flexibility in drafting has become critical. Trustees and personal representatives must be able to respond to changes in residence status, relief availability and family circumstances without triggering avoidable tax charges. Exit routes, powers of appointment and review mechanisms now carry greater significance than finely calibrated tax outcomes at inception.

This has also reshaped review culture. Planning can no longer be treated as complete once implemented. Residence changes, legislative developments and shifts in asset composition should be treated as trigger events requiring reassessment, alongside more traditional life events.

The Adviser’s Role Recalibrated

These developments have reshaped the adviser’s role. Technical accuracy remains essential, but it is no longer sufficient. Advice now centres on judgement: explaining trade-offs, modelling plausible outcomes and managing expectations in an environment where certainty has given way to probability.

The adviser’s value lies less in eliminating tax exposure and more in helping clients understand and manage it. This often requires restraint - resisting over-engineering for marginal efficiency - and a sustained focus on governance, funding and resilience. Legacy planning, in particular, now requires active stewardship, with structures revisited and re-tested against current residence, asset profiles and relief availability. Regular review is no longer optional, but a practical response to a changed environment.

Conclusion

Trust and estate planning in 2026 is not less effective than before, but it is more conditional. Reliefs remain available, trusts remain relevant and planning opportunities persist. What has changed is the margin for error and the importance of ongoing engagement.

The most successful plans are rarely the most elaborate. They are the ones built on clear objectives, governed with discipline and designed to function when residence, relief or liquidity assumptions shift. In a changing tax environment, effective estate planning is defined less by permanence than by its capacity to adapt.

FROM LEGACY TO LIABILITY LIFE AFTER POLICY CHANGE

Authored by: Alfie Turner (Tax Advisor) - Baker McKenzie

Currently, business property relief (“BPR”) provides 100% relief from UK inheritance tax (“IHT”) on qualifying assets (most commonly shares in a private trading company, which will be the focus of this article). It is a very valuable relief for shareholders in privately-owned businesses, many of which tend also to be family-run businesses. To date, BPR has ensured that such businesses can be held as inter-generational assets without concern as to the funding of IHT and the part that must play in a family’s succession plan.

With effect from 6 April 2026, BPR will, very broadly, be capped at providing 100% relief on the first £2.5 million of value only, and 50% relief on value exceeding that threshold. This £2.5 million cap for 100% relief from BPR will also be combined with the relief under agricultural property relief (“APR”). This represents a significant shift in UK tax policy. The implications of this policy change for shareholders in affected family run-businesses could be significant, and at the very least will require those affected shareholders (and by extension their families) to think carefully about how those company shares fit into their broader succession plan.

This article does not discuss the technical aspects of the upcoming BPR (and APR) tax reform in detail. Rather it seeks to debate what direct and second order implications there might be, and what shareholders and families should be thinking about in terms of its potential effects on their plans for dealing with their shares in those affected companies.

A Need for Liquidity

As this article’s headline notes, what was once a legacy risks becoming a (significant) tax burden for those left behind. The BPR reform will include welcomed measures including the ability to pay tax by instalments on an interest-free basis. However, for many those measures do not go far enough.

In cases where a liability does arise there will be a need to access liquidity, and in many cases the source most often relied on by those affected sits in the very business that gives rise to the tax liability.

Most will need to rely on one or more of dividends, loans, capital extraction or insurance to meet the demand for tax. Each of those options come with their own challenges. Dividends may prove a prohibitively expensive route (with as much as £1.65 of post-tax distributable reserves needed to fund every £1 of IHT), or cause too much disruption to the businesses cash strategy to rely on, loans may engage the loan to participator and/or beneficial loan charge rules which would require care, effective capital extraction can be difficult particularly from UK tax resident companies and the gateway that exists in the Corporation Tax Act for payment of IHT is not accessible for trustees and is unlikely to be accessible for individuals particularly if the instalment option is relied on, and finally insurance can be a reliable option but only for those able to meet ongoing premiums.

Disputes as to Valuations

Claims for BPR are regularly referred to HMRC’s Shares and Assets Valuation team. Given the increase in tax revenues that should flow from the change in policy, the fact that a greater number of assets will now fall within the scope of tax, and some of the mitigation options that taxpayers may explore, valuations are likely to come under even greater scrutiny.

HMRC scrutiny is likely to intensify around minority discounts; surplus cash and non-business assets; values attributed to different share classes in the same company; and cross-border structures affecting effective rates. With greater scrutiny expected, proper and contemporaneous record keeping, including evidence of professional

Mitigating the IHT Exposure

Given the difficulties of funding the IHT, taxpayers may look to ways of mitigating this potential exposure. In particular, taxpayers may look to accelerate the gifting of shares to the next generation and/or to wider family members. The existing IHT and capital gains tax framework can allow for such transfers to be carried out tax efficiently during lifetime.

However, gifts also have their limitations. Firstly, it is by no means certain that the donor will survive the gift by seven years or more, so obviating the liability to IHT. Consequently, gifting is more likely to be considered by younger owners and/or those who have sufficient liquidity to protect against downside by taking out insurance.

Secondly, gifting shares can cause family governance issues. Particularly if it is on an accelerated basis, as shareholders may part with their shares before they are ready to give up control and/or shares may be transferred to people before they are ready to govern. Prematurely effected succession plans are often the genesis of family disputes. An accelerated succession plan devised to mitigate against a potentially business fracturing tax issue, may itself be the beginning of the end

The reforms to BPR (and APR) need not be fatal for such families and such businesses, but ineffective planning for the “new-world” from 6 April 2026 may well be.

Where there are Losers there are also Winners

The BPR reforms, together with other recent tax reforms, have appeared to turn the UK into a more hostile environment for privately-owned businesses. Whilst there exists many options that will enable taxpayers to mitigate the effect of the upcoming changes, for some the options discussed above and others available to them will prove insufficient and this may lead to their only option being to exit.

This may present an opportunity to market participants to acquire often successful family businesses that were previously off-limits. Often, private equity ownership is antithetical to the family ethos, business culture and long-term stewardship aims that characterise most family-businesses. However, where there are losers there are winners, and trade buyers, private equity and other outside investors may see this as an opportunity to make strategic acquisitions in an otherwise difficult to penetrate market.

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BEFORE YOU GO WHY EXPATS MUST UNDERSTAND THE TAX LANDSCAPE

Authored by: Alicea Castellanos (CEO and Founder) - Global Taxes LLC

As interest in living abroad continues to grow among Americans, many would be expats focus on lifestyle changes, visas and logistics, often leaving tax planning as an afterthought. Yet understanding how a move overseas affects personal tax obligations is one of the most important steps in preparing for life in a new country.

Relocating internationally can introduce complex and unfamiliar tax rules, particularly for U.S. citizens, who remain subject to U.S. tax reporting even while living abroad. Early awareness of a destination’s tax framework can help individuals avoid compliance issues, unexpected liabilities, and unnecessary stress later on.

Below is a high-level overview of key tax considerations for U.S. expats moving to two popular destinations: Mexico and Spain.

Mexico Tax Residency and Filing

In Mexico, tax residency is determined by several factors. An individual may be considered a Mexican tax resident if they:

• Spend more than 183 days in Mexico during a calendar year (consecutive or non consecutive),

• Establish a permanent home in the country, or

• Meet the economic ties test, which can include owning property, operating a business, holding employment, or having a spouse or dependents who are Mexican tax residents.

Mexican tax residents must file an annual income tax return, known as the Declaración Anual de Impuestos sobre la Renta, using Forma 22, generally due by 30 April each year.

Foreign nationals who work in Mexico or earn income from Mexican sources, such as rental or investment income, are typically required to file, although some exemptions may apply depending on the nature of the income.

Income Tax and Other Obligations

Mexico’s individual income tax system is progressive, with rates topping out at approximately 30% for higher earners. This maximum rate applies to income above roughly MXN 7.3 million (around USD 390,000), depending on residency status.

One feature that often stands out for HNW individuals is that Mexico does not impose inheritance, estate, gift, or wealth taxes. However, this does not eliminate the need for careful planning, particularly for cross-border estates.

Additional considerations include:

• State taxes, which generally range from 1% to 3% depending on location

• Non cash compensation, which is taxable and includes employee benefits and any taxes paid by an employer on an individual’s behalf

• Value Added Tax (VAT), known locally as IVA, which applies to most goods and services at a standard rate of 16%

Social Security and U.S. Tax Relief

Mexico operates a mandatory social security system funded by both employers and employees. A U.S.Mexico Social Security Agreement helps prevent double contributions for those who have worked in both countries.

U.S. citizens living in Mexico may also be eligible for several forms of U.S. tax relief, including:

• The Foreign Earned Income Exclusion (FEIE), which allows qualifying individuals to exclude a portion of foreign, earned income from U.S. taxation

• The Foreign Tax Credit, which can offset U.S. tax liability for taxes paid to Mexico

• The Foreign Housing Exclusion, available in conjunction with the FEIE

Spain

Residency and Reporting Requirements

Spain’s tax year runs from January to December, with annual tax returns (declaración de la renta) typically filed between 1 May and 30 June of the following year.

An individual is considered a Spanish tax resident if any one of the following conditions is met:

• They spend more than 183 days in Spain during the calendar year,

• Their primary economic or professional activity is based in Spain, or

• Their spouse and/or dependent children reside in Spain

Individuals earning less than €22,000 per year from a single payer may not be required to file a return, though other reporting obligations may still apply.

Treaty Protection and Double Taxation

The U.S.-Spain tax treaty is designed to reduce the risk of double taxation. In general, taxes paid in Spain may be credited against U.S. tax liabilities on the same income, though reporting requirements in both countries still apply.

The Beckham Law

One of Spain’s most notable features for incoming professionals is the Beckham Law, originally introduced to attract international talent. This regime allows qualifying expats to be taxed as nonresidents, even while living in Spain.

Under the Beckham Law:

• Spanish source employment income is taxed at a flat 24% rate up to €600,000

• Foreign income is excluded from Spanish taxation

• Foreign assets are not subject to Spanish wealth tax

To qualify, applicants must not have lived in Spain during the previous five years and must hold a qualifying employment contract, among other conditions.

Capital Gains, Property, and VAT

Capital gains in Spain are calculated based on the difference between the sale price and acquisition cost of an asset, adjusted for improvements and allowable deductions.

Several reliefs are available to residents, including:

• Exemptions when proceeds from the sale of a primary residence are reinvested into another main residence within two years

• Capital gains tax exemptions for residents aged 65 and over who sell their primary residence

• Exemptions for individuals over 65 who reinvest gains (up to €240,000) into a life annuity within six months

Non-residents selling Spanish property are subject to a 3% withholding tax, which may be refundable if the final tax liability is lower.

Property purchases may trigger:

• Transfer tax of 8,10% on resale properties

• VAT (IVA) of 10% on new,build properties, plus stamp duty

• Standard VAT of 21% on most goods and services, with reduced rates applying to certain items

Planning Ahead

As expatriation becomes increasingly common, Americans considering a move abroad must understand that a change of country affects far more than lifestyle. Tax residency rules, reporting obligations, and cross border planning considerations can have lasting implications for income, assets, and long term wealth.

Early planning, ideally before relocation, is essential to navigating the complexities of international tax compliance and avoiding costly surprises.

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SCOTTISH SUCCESSION

KEY CONSIDERATIONS FOR HIGH-NET-WORTH FAMILIES

Authored by: Susanne Batchelor (Partner and Head of Personal Team) - Brodies

Scotland’s succession rules contain distinctive features that high-networth (“HNW”) families must consider. While UK-wide tax regimes such as inheritance tax (“IHT”) apply equally north of the border, Scots law governs critical aspects of succession for those domiciled in Scotland. Specifically, legal rights, Scotland’s form of forced heirship, guarantees cash sums to spouses and children, and can significantly impact asset control. Combined with cross-border considerations, property tax nuances, and UK residence-based tax tests, these rules demand tailored strategies to safeguard wealth and smooth succession across generations.

IHT: The Long-Term Residence Test

IHT remains a UK-wide regime, applying equally in Scotland and the rest of the UK. Until 5 April 2025, domicile was the connecting factor for IHT purposes. However, from 6

April 2025, liability to IHT depends on a statutory residence-based test determining whether the individual is a Long-term Resident (“LTR”).

An individual is a LTR if they have been UK-resident for 10 of the previous 20 tax years. A LTR will be liable for IHT on their worldwide estate whereas non-LTRs will only be liable for IHT on their UK assets. Importantly, even after ceasing to be UK-resident, former LTRs remain liable for a “tail” period of up to 10 years, depending on their years of residency.

For HNW individuals, particularly with cross border connections, this distinction is significant. A period of UK residence may bring global holdings like investments, companies, trusts to which you’ve contributed, and overseas real estate - within the UK IHT net, even if your legal domicile lies elsewhere. For internationally mobile individuals, this means revisiting estate plans, tax treaties, and any trust structures.

The Prevailing Importance of Domicile

Although domicile no longer determines IHT liability, it remains critical for succession law. For Scottish domiciled individuals, Scots law governs the succession of moveable assetswherever located. Understanding the distinctive features of Scots law is essential for anyone domiciled in Scotland.

Legal

Rights: Scotland’s Forced-Heirship Rules

Under Scots law, a surviving spouse or civil partner and children have an automatic legal rights claims in the net moveable estate, even if a will excludes them.

A claimant has 20 years from the rights becoming enforceable to claim. For HNW families, this can be problematic where the moveable estate includes private company shares or partnership interests - such as farming partnerships holding land, or if there are young beneficiaries. Without adequate planning, claims can disrupt succession plans, and force asset sales, often with undesirable tax consequences.

There are valuable mitigation strategies that HNW families should consider. These include lifetime gifting where feasible, using trusts (or other structures), obtaining insurance, and aligning shareholder agreements with succession plans. Robust, defensible valuations of private shares are criticalas disputed valuations can significantly affect legal rights calculations.

Cross-Border Issues: Wills and Powers of Attorney

A will is only as effective as its compliance with formal validity rules and interaction with domicile. Scotland has its own legal system, and while wills made elsewhere in the UK are generally recognised under reciprocal rules, Scots law applies to moveable assets if you are domiciled in Scotland.

For internationally mobile families, a separate Scottish will for Scottish assets can streamline confirmation (the Scottish equivalent of probate), reduce delays, and ensure compliance with Scots succession rules, while foreign wills govern assets abroad.

While there is a reciprocal understanding between Scotland and England and Wales that a power of attorney (“POA”) created in one jurisdiction should be recognised in the other, practical issues often arise. Institutions may impose their own

requirements, which can lead to delays or refusals – often resulting in higher legal fees. In Northern Ireland, a Scottish POA can be used if an organisation accepts its authority.

Similarly, a Northern Irish POA may be recognised in Scotland, but this is not automatic and depends on the receiving institution’s willingness to accept it. The safest approach is to have separate Scottish POAs prepared if there are Scottish assets, ensuring that the POAs align and avoid conflicts.

Cohabitants: No Automatic Rights

The structure of families is changing and unmarried couples (‘cohabitants’) are more prevalent. However, Scotland does not grant cohabitants the same rights as spouses. In Scotland, a surviving cohabitant may only apply to court for financial provision where there is no will. The court action must be raised within 6 months of the date of death, although this will increase to 12 months in future. The court has full discretion to decide how much to award the cohabitant, but awards are capped at what a spouse would have received. For cohabitants, a valid will is the most effective way to ensure your partner is protected and avoids the uncertainty and cost of a court application.

Property Planning and ADS

While not a succession rule, Scotland’s Additional Dwelling Supplement (“ADS”) should be considered for families wishing to buy second homes for children or invest in property as part of their wealth planning. The ADS is an extra charge on property purchases where you (or your spouse or cohabitant) already own another property.

If applicable, ADS applies at a flat rate of 8% (if the consideration is above £40,000), in addition to Land and Buildings Transaction Tax, thus, it can materially increase purchase costs. Trusts might be used as planning vehicles but the wider IHT implications of this structure, as well as the future impact on beneficiaries who might acquire property in their own name in the future, should be considered.

Why Advice Matters

The interaction of UK-wide IHT changes, Scots succession law, and Scottish property taxes demands an integrated plan. Key actions include:

• Consider your residence timeline and LTR status.

• Confirm your domicile and take advice on its implications.

• Take advice on the impact of legal rights, particularly where business assets are concerned.

• Align your documentation across jurisdictions.

• Seek advice before engaging in family property strategies.

For HNW or internationally mobile individuals with Scottish connections, proactive planning is essential to protect wealth and provide certainty.

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GLOBAL MOBILITY MEETS TAX PLANNING

MALTA’S ROLE IN MODERN PRIVATE CLIENT STRUCTURING

Key Legal Points

• Determining tax residence versus legal residence in cross-border family planning.

• Structuring wealth under Maltese remittance-based taxation for nondom individuals.

• Aligning family office and assetholding structures with mobility goals.

• Navigating long-term residence and citizenship frameworks without conflating tax benefits.

• Integrating residential property ownership into compliant relocation and succession strategies.

Executive Summary

Global mobility is no longer a peripheral consideration for high-net-worth families; it is a central pillar of tax planning, asset structuring, geo-political planning and inter-generational strategy. Malta has emerged as a compelling jurisdiction at this intersection, not because it promises shortcuts, but because it offers legal clarity, predictability, and flexibility within a

robust European framework. This article explores Malta’s role in modern private client structuring, combining technical tax considerations with residency, citizenship, and property planning perspectives drawn from practice.

Global Mobility as a Structuring Driver

For internationally mobile families, mobility decisions increasingly precede tax structuring rather than follow it. Where a family chooses to reside, establish presence, or anchor longterm ties determines not only personal lifestyle outcomes but also the tax treatment of income, gains, and wealth.

Malta’s relevance lies in its ability to accommodate layered outcomes: a family may seek legal residence without immediate relocation, tax residence without domicile exposure, or long-term security through permanent residence or citizenship while maintaining global operational flexibility. The sophistication of modern private client advice lies in sequencing these objectives correctly – an approach central to the firm’s Private Client Tax and Immigration and Citizenship Law practices at Chetcuti Cauchi.

Malta Tax Residence and the Non-Domiciled Framework

From a tax perspective, Malta continues to attract internationally mobile individuals due to its long-established residence-based taxation system for individuals who are resident but not domiciled in Malta. These matters are a core focus of the firm’s Private Client Tax Practice, which advises on the interaction between residence, remittance, and international structuring.

“Malta’s remittance-based system remains particularly effective for internationally active families, provided it is approached with discipline. The key is not optimisation in isolation, but alignment between residence status, asset location, and real patterns of use and control.”

Magdalena Velkovska, Director –Private Client Tax, Chetcuti Cauchi Advocates

Foreign-source income is taxable in Malta only if remitted, while foreign capital gains are generally excluded from Maltese taxation even when remitted. This creates legitimate planning opportunities, especially where wealth is held through well-structured international vehicles. However, these outcomes depend on careful management of residence, substance, and reporting obligations, particularly in an era of enhanced transparency under CRS and DAC frameworks.

Private Client Asset and Family Office

Structuring

Malta has also gained traction as a family office and asset-holding jurisdiction, particularly for families seeking a European base that combines regulatory familiarity with operational pragmatism. Advisory work in this area typically spans tax, corporate, and governance considerations and is closely aligned with the firm’s broader Private Client and Family Office advisory services.

Structures commonly encountered in practice include holding companies for investment assets, family investment vehicles, and governance arrangements designed to support succession and next-generation involvement. Malta’s corporate law framework, professional services ecosystem, and EU market access allow these structures to function efficiently without excessive administrative burden.

Crucially, tax structuring in this context is not detached from governance. As families globalise, issues

of control, reporting lines, and family constitutions increasingly intersect with tax and legal design.

Residency, Citizenship and Long-Term Security

From a mobility and legal status perspective, Malta offers a spectrum of residence and citizenship frameworks, each serving different strategic objectives. These matters fall within the firm’s Immigration & Citizenship Law Practice, which advises families on lawful access, status continuity, and long-term security.

“What we see in practice is that families are no longer asking for ‘a programme’. They are asking for certainty –certainty of access, continuity, and legal status across generations, within a European rule-of-law environment.”

Jean-Philippe Chetcuti, Managing Partner, Chetcuti Cauchi Advocates

The Malta Permanent Residence Programme is frequently used as a long-term residence solution or strategic contingency rather than a relocation tool. Separately, Maltese Citizenship by Merit operates as a distinct legal framework grounded in contribution and national interest, not as a tax or investment construct. Each pathway must be evaluated on its own legal terms, without conflating residence rights with tax outcomes.

Residential Property as a Strategic Asset

Residential property ownership in Malta often plays a dual role: lifestyle anchor

and structuring component. For many families, property acquisition supports residence applications, facilitates genuine presence, and provides longterm optionality. These matters are typically advised upon in conjunction with the firm’s Property Law Practice.

From a planning perspective, property decisions must be integrated with tax residence analysis, succession planning, and holding structures. Whether held personally or through corporate vehicles, Maltese real estate requires careful consideration of acquisition taxes, ongoing compliance, and exit planning – particularly for families with multi-jurisdictional heirs.

Strategic Implications for HNW Families

The Maltese proposition is not about singular advantages but about coherence. When tax residence, legal status, asset structuring, and property ownership are aligned, Malta can function as a stable European hub within a global family strategy.

As global mobility becomes more regulated, jurisdictions that offer clarity, proportionality, and legal certainty will continue to outperform those built on transient incentives.

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FROM TAX SHELTER TO ESTATE ASSET: RETHINKING PENSIONS AMID UK IHT REFORM

Authored by: Alfie Greenway (Co-Founder & Director) - Reckon Financial Services

2026 might just be in its infancy, but many wealth advisers are already planning for the major inheritance tax (IHT) reforms set to impact UK-based HNWs and internationally mobile families.

What’s changing? From April 2027, any unused funds in a deceased’s private pension pot will be included within the wider estate for inheritance tax calculations. The move marks a departure from the outgoing rules, where pensions could be passed on tax-free as a sheltered asset. Doing so granted families a tax-efficient vehicle for wealth transfer, while allowing other assets to be drawn down first to fund retirement.

Soon, the vehicle will be removed, yet beyond the obvious shift in tax treatment, we see the UK’s incoming IHT reform as something much larger. Already, pensions must no longer be considered a peripheral asset but an integral part of estate planning. Let’s take a closer look at why and explore the way forward.

Why IHT Reform Matters Most to Mobile HNWs

HNWs with cross-border interests will feel the effects of the IHT reform more acutely because of the scale and complexity of their estate.

Until now, HNWs would typically focus their efforts on preserving pension wealth while drawing on taxable assets to benefit from their pension’s position outside of IHT. As a result, their pension may represent one of the largest portions of their total estate. Layered onto this is

Multiple residences, beneficiaries across countries, and advisors in different jurisdictions all increase the coordination needed at the time of death. This can create friction in processes and stalled decision making, precisely when the new taxation requirements demand speed and clarity.

Where pensions now fall into IHT calculations, delays can result in cash flow strain, reporting errors, or postponed distributions. In this reality, complexity becomes a source of risk that threatens to erode the value of the final estate.

Avoid Tactical Fixes for a Structural Shift

Through Reckon’s own work with HNW

clients ahead of April 2027, we often see a tactical response being touted when a structural change is what’s needed. Namely, accelerating pension drawdown.

Calls to accelerate pension withdrawals assume the primary risk is the size of the pot. In reality, the IHT changes impact how pensions are administered and taxed within the estate. Accelerating withdrawals and other tactics like using the maximum gifting allowance may alter headline figures, but they fail to address the administrative and coordination burden spotlighted earlier.

Meanwhile, drawing a pension sooner could increase income tax exposure during the retiree’s lifetime and move investments into less efficient wrappers. And, with a greater IHT burden, estates may face a liquidity strain when pension benefits must first be allocated to cover the amount owed.

Looking ahead, we believe the success of an estate plan will increasingly be measured by how smoothly it functions at death, rather than solely on how tax efficient it appears on paper.

A More Robust Route Forward

If IHT reforms call for a structural rethink, what might this look like exactly?

• Treat pensions as a core estate asset. The pensions strategy must now sit alongside trusts, life assurance, succession planning, and business interests rather than being addressed in isolation, or being left entirely in the hands of a pension provider.

• Design estates for execution and optimisation. Pension planning should now outline what happens at the moment of death: who acts on what task, what information is needed, and how quickly tax liabilities can be met. Doing so can avoid bottlenecks that erode an asset’s value, such as an asset freeze or interest penalties if IHT payments are delayed.

• Stress-test estates for liquidity. Look beyond tax exposure modelling to understand whether other sources of liquidity exist to cover IHT if pension benefits are delayed or withheld. If liquidity is found elsewhere, executors avoid the need for short-term borrowing to cover tax, which eats into the estate’s total value. Meanwhile, pension benefits can reach beneficiaries sooner.

• Map asset timing, not just value. Different assets become available at different speeds. Understanding these timelines can help advisers to avoid delays and prevent executors being forced to make decisions based on deadlines, not sound strategy. Fewer delays mean fewer ongoing costs such as legal fees and interest payments. Meanwhile, understanding when assets are due to be released simplifies the sequencing of payments and allows partial distributions to reach beneficiaries sooner.

The Bottom Line

Although April 2027 may seem some way off, there is already work that families can be doing to prepare for the upcoming IHT reforms. This includes reviewing cross-border structures, considering how pensions fit within wider estate and succession planning, and understanding the evolving role of pensions beyond their tax treatment. Taking these steps can help preserve an estate’s value on death and ensure that more of an individual’s wealth is passed on to their intended beneficiaries.

Knowing what matters.

PLANNING FOR U.S. CITIZENS IN THE GCC

by: Suzanne

There appears to be a veritable “gold rush” in the GCC. People from every corner of the globe are flocking to the region to make their fortune, most commonly the United Arab Emirates (the relative newcomer in the GIFC rankings with Dubai at 11 and Abu Dhabi at 38 in the September 2025 GIFC rankings) and Saudi Arabia. A welcome effect of this phenomena is the return of younger GCC nationals who were educated abroad and settled outside of the region.

Historically, many GCC families included U.S. citizens among their ranks, typically because they were born in the United States or acquired citizenship at birth through parents who were U.S. nationals.1 “Foreign grantor trust” planning initiated by GCC patriarchs to accommodate family members who are U.S. taxpayers is a common place. The relocation of ultra high net worth Americans whose families are not from the region is a more recent phenomenon.

1 8 U.S.C. 1401.

The GCC2 is an attractive destination for many reasons, including the respite from personal income taxes imposed elsewhere.3 Unlike the vast majority of people who relocate or return to the GCC, U.S. citizens and green card holders continue to be subject to tax on their worldwide income and gains. U.S. citizens and domiciliaries remain subject to U.S. gift and estate tax on their worldwide gifts and bequests.

It is not uncommon for U.S. taxpayers to submit U.S. tax returns that report their U.S. source income to the U.S. Internal Revenue Service but omit income from sources outside the United States. Dubai is sometimes referred to as the “Las Vegas of the Middle East”. But what happens in the GCC does not stay in the GCC where taxes concerned.4

The United States does not have an income tax treaty with any GCC country. However, that does not mean these countries do not share information with the U.S. government or that noncompliance is ignored or excused.

Cultural norms are sometimes at odds with the U.S. tax rules. The region’s GDP is fuelled by family business.5 In an environment where there is no income or gift tax family members may freely transfer assets to one another. A family member charged with expanding into a new market or line of business or joint venture with a third party need not consider taxes when becoming the shareholder of an entity. These transfers can result in U.S. gift tax issues, as well as the imposition of unexpected taxes under the U.S. controlled foreign corporation rules6 or the passive foreign investment company regime.7 In some circumstances transfers will not be respected if the donor continues to benefit from or control the property that was purportedly gifted or assigned to another family member.

2 The Gulf Cooperation Council consists of the Kingdom of Saudi Arabia (Saudi Arabia), the Kingdom of Bahrain (Bahrain), the State of Qatar (Qatar), the State of Kuwait (Kuwait) the United Arab Emirates (UAE) and the Sultanate of Oman (Oman).

3 As from 1 January 2028, Oman will be imposing a 5% income tax on tax residents with a worldwide income of more than 42,000 Omani rials. No other GCC country imposes an income tax although they do impose corporate taxes. Bahrain, Oman, Saudi Arabia, and the UAE impose VAT. Qatar is expected to introduce VAT soon.

4 All of the GCC countries with the exception of Oman have executed FATCA Agreements. Bahrain (Jan. 18, 2017); Kuwait (April 29 2015); Qatar (Jan. 7, 2015); Saudi Arabia (Nov 15 2016); and UAE (June 17 2015).

5 The UAE Ministry of Economy and Tourism reported that approximately 60% of the UAE’s GDP was contributed by family businesses, which account for more than 80% of employment, almost 90% percent of all private-sector companies in the UAE. https://www.wam.ae/en/article/bmlj11e-familybusinesses-contribute-60-uae-gdp-says

6 IRC §§951-965.

7 IRC §§1291-1298.

Foundations are a popular planning tool in the UAE. DIFC foundations are expressly referred to as companies not trusts in the DIFC Foundations legislation. They are generally agreed to be foreign trusts for U.S. tax purposes. It is possible to create a DIFC foundation that will qualify as a “foreign grantor trust” for U.S. income tax purposes, optimising the tax position of U.S. family members who benefit from the foundation.8

U.S. citizens and domiciliaries have a 15 million USD gift and estate tax exemption, reduced by taxable lifetime gifts. The unlimited gift and estate tax marital deductions do not apply to gifts and bequests to non-citizen spouses. U.S. estate tax can be deferred until the death of a surviving spouse if the bequest passes to a qualified domestic trust (QDT) or the surviving spouse transfers the assets to a QDT within 9 months of the decedent’s death.

From a U.S. perspective this means assets passing to a surviving spouse in accordance with sharia can be contributed to a QDT by the surviving spouse. However certain assets, such as UAE real property, cannot be held by a foreign trust. In that case if deferral of U.S. estate tax is desired it may be possible to negotiate the use of a specially drafted UAE foundation as a QDT.

It is not unusual for people who do not intend to return to the United States to consider renouncing their U.S. citizenship.9 It has been possible for many people to reside in the United States post expatriation.

However the current President has issued Executive Orders restricting the ability of citizens of certain countries to even visit the United States.

8 Cf. Rost v. United States, 44 F.4th 294 (5th Cir. 2022). To date the IRS has not published any guidance regarding the classification of ADGM or DIFC foundations. There is also a lack of clarity on the U.S. treatment of ADGM DLT foundations used for Web 3 entities, DAOs and blockchain. 9 A detailed discussion of the U.S. expatriation tax regime (see IRC §877A) is outside the scope of this note.

APR AND BPR RELIEF ALLOWANCE INCREASED TO £2.5 MILLION: WHAT DOES IT MEAN FOR BUSINESS OWNERS AND FARMERS?

Just two days before Christmas, the UK Government announced an increase in the threshold for 100% relief for APR and BPR of £2.5 million (up from £1 million as first announced on 30 October 2024, see here). As anticipated, qualifying agricultural property and/or business property above this threshold will be subject to half the usual rate of inheritance tax (‘IHT’) at an effective rate of 20%.

Combined with the news announced just weeks earlier at the Budget on 26 November 2025 that any unused portion of an individual’s allowance can be transferred to the estate of their surviving spouse or civil partner, farmers and business owners may now be able to breathe (somewhat of) a sigh of relief. Moreover, deaths prior to 6 April 2026 will be able to benefit from the allowance transferability with a deemed full £2.5 million allowance available.

It is now proposed that the £2.5 million amount will be adjusted for inflation from 6 April 2031 (instead of 6 April 2030).

The amended draft legislation to reflect these changes was laid before Parliament on 5 January 2026, leaving very little parliamentary time to debate the Finance Bill before these rules will come into force, anticipated from 6 April 2026. Otherwise, the anticipated changes to APR and BPR which were first announced on 30 October 2024 broadly remain unchanged.

The effect of these most recently announced changes are as follows:

• For a married couple or civil partners, up to £5 million of assets qualifying for either relief can be shielded from IHT on the death of the survivor. This is in addition to the usual allowances, such as the nil rate band (currently £325,000), the unused portion of which can be transferred from an individual’s estate to the estate of the surviving spouse or civil partner.

• Therefore in total, a married couple or civil partners can leave up to £5.65 million on the survivor’s death provided 100% qualifying agricultural and/or business property is held.

• It is not a requirement that both spouses or civil partners jointly own the qualifying agricultural or business property; it can be owned solely by one spouse or civil partner for the allowance to be transferable. Lifetime transfers between spouses to maximise allowances will therefore no longer be necessary as a planning strategy for farmers and business owners concerned about the impending changes.

• In respect of lifetime gifting, an individual’s allowance will apply as anticipated, refreshing every seven years, but at the higher £2.5 million cap.

• As for trusts, the amendments to the draft legislation also increase:

- the maximum lifetime allowance for a settlor to £2.5 million; and

- the maximum trust allowance to £2.5 million which refreshes every ten years

Next steps

As ever, the rules remain in draft form and they are subject to change. The advice remains to review existing estate plans and consider how any IHT will be funded (see here). There remains a short window of opportunity prior to 6 April 2026 for APR and BPR planning with trusts (whether there are preexisting trusts in place or with a view to settle agricultural or business property on trust for future generations).

A final recommendation is for those farmers and business owners in a long-term relationship to now seriously consider marriage or civil partnership.

For deeper commentary and practical insights on the UK 2025 Budget, read more from our experts here

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