Reflections from the TL4’s 3rd Annual Transatlantic Tax & Estate Planning Forum

This week, I attended the ThoughtLeaders4 Private Client’s 3rd Annual Transatlantic Tax & Estate Planning Forum tax conference covering the hot topics in the transatlantic private client world. Key takeaways are below.

Uncertainty and Hypotheses

Lawyers, wealth managers, and tax advisers all agree that it is a testing time to advise clients with so much uncertainty on tax policies.

The speakers and audience were therefore hypothesising the outcomes of the UK budget and US presidential election, trying to find angles to help our clients work through the complexity and identify potential opportunities and spot hidden traps.

Potential Tax Breaks for UK Expats

There are always winners and losers with changes in tax law and some of the case studies demonstrated this nicely.

A ‘winner’ could be a UK-born individual that has been living outside the UK for over ten years and returning to the UK post 6 April 2025, especially if they don’t also possess US citizenship/green card.

Under current proposals, an individual in this scenario would potentially benefit from some unexpected tax breaks and be exempt from UK tax on non-UK income and gains for the first four tax years.

Not for the first time, I heard concerns raised as to whether announcements in the budget will exclude formerly domiciled individuals (for those who were born in the UK), but how? If the domicile concept is to be totally abolished, it will be difficult for the government to differentiate and would need to specifically carve out these individuals using different means. One to watch.

US Tax Legislation – Status Quo Likely

At a high level, the majority of experts do not expect wholesale changes in US tax legislation regardless of who is elected. This view is primarily based on the low likelihood of either party conjuring up sufficient support to control the House and Senate. Without this, it is difficult for any controversial tax legislation to be passed.

However, there are question marks over whether the US lifetime gift and estate tax exemption will be left to naturally sunset back to circa $7m (after inflation). My guess would be doing nothing and letting it sunset is the path of least resistance, sidesteps any blame and negative reaction and is therefore the most likely outcome.

This presents an opportunity for those clients whose wealth dwarfs $7m and have sufficient assets and liquidity to consider making large gifts ahead of these changes, i.e. by 31 December 2025.

Impact on US Citizens in the UK

Obviously, many of the speakers discussed the impact of abolishing the non-dom regime, especially for US citizens living in the UK. It was general consensus that the proposed IHT reform and changes in trust taxation that are the more concerning aspects for our clients.

We have been exploring treaty relief from some of the punitive changes on the horizon, so it was reassuring that some speakers touched on potential treaty protection too. They highlighted that there could be means to mitigate the UK IHT exposure for US citizens leaving the UK. This relates to the exposure to IHT for a 10-year period after leaving the UK, if the individual was resident in the UK for 10-year period prior to departure.

“How will that 10-year tail be policed?” Continues to be a question raised by industry professionals.

It’s a great question.

Regardless, we will continue to explore treaty protection for US citizens who have or will depart the UK if these rules are passed into UK legislation.

Importantly, UK nationals are not eligible for treaty protection from IHT in these circumstances and this raised more questions for whether some of our clients, if the numbers make sense, may consider relinquishing their UK citizenship and what the practical implications of that would be. All very interesting and totally new concepts for us all to start thinking about.

A Complex Landscape

There were passing tidbits throughout the day that serve to be useful reminders. One of these was that despite the future landscape changing so much there continues to be a need for pre residency tax planning.

Individuals establishing UK residency from 6 April 2025 will no doubt be pleased that their overseas income and gains will be exempt, but this is only for four years and they will need to be prepared for what will happen in year five, they also need to be mindful not to import any overseas structures instantly when first establishing UK residency.

I also enjoyed and needed a timely reminder that as much as these international tax issues are the centre of my world, that is unlikely to be the case for Rachel Reeves, Keir Starmer, Donald Trump, Kamala Harris, HMRC, the IRS etc. They all have a “few things” on their plate right now so crystal clear clarity may not be forthcoming for some time and the budget may even provide more questions than answers.

Still lots to think about. A thought-provoking day, and more discussions to be had internally.

Contact us if you have any questions.

Written by Glenn Snow