After UK Prime Minister Rishi Sunak apparently ruled out a January 2025 General Election at a festive press drinks party last week, 2024 looks set to be a busy year for the UK’s private wealth sector as the Conservative and Labour parties look to incentivise undecided voters.
With this in mind, eprivateclient asked private wealth specialists to tell us what they think may be in store in 2024….
Rebecca Durrant, tax advisory firm Crowe UK’s head of private clients, said that she was anticipating “some giveaways from the Prime Minister in the forthcoming Spring Budget, possibly in terms of a percentage point reduction to income tax - which is very much on his Chancellor’s wish list.”
She added that changes to inheritance tax – much mooted since the summer - could be likely too “but this is political point scoring, rather than revenue generating, as it would be considered a welcome change for those who perceive it as a double tax charge for savers and investors.”
Judith Millar, a partner at UK law firm BDB Pitmans, added that whilst the “press was full of attention grabbing headlines over the summer about the Conservatives abolishing IHT and rumours about Labour curtailing IHT reliefs. But are there likely to be immediate changes?
“If Labour forms a new government it has already made a pledge to remove non dom tax status and that, in itself, will be a significant project. IHT reform, particularly if a structural review is to be undertaken, may well be further down the agenda.”
Ms Durrant said that despite Rachel Reeves, Labour’s shadow chancellor, having signalled steadying the economy is a priority before making any drastic changes, “a swift overhaul of the tax treatment for non-UK domiciled individuals living here, along with changes to the taxation of those in the Private Equity arena, is likely.
“For those in power, the key challenge here is retaining these individuals as the country becomes a less ‘tax attractive’ place to live and work.”
Sophie St John, a partner at BDB Pitmans, agreed that it “seems inevitable [Labour] will abolish the non-dom regime as we know it.”
“I predict,” she went on, “that having abolished the regime the new Government will replace it with something else; hopefully a regime which is straightforward, transparent and attractive to internationally mobile HNWIs and UHNWIs looking to establish themselves in a new country.”
Ms St John warned however, that If this does not happen “it is highly likely these individuals will take advantage of other jurisdictions favourable regimes, to the detriment of UK Plc.”
Ben Lister, a partner in Taylor Wessing’s private wealth group, was optimistic that the UK will still attract wealth from abroad.
“Despite negative headwinds in the UK, I expect to see international families continuing to want to move to the UK and invest in commercial and residential real estate and businesses (including early stage businesses) in the UK,” he said.
“Whether or not there is a change of UK government in the next 12 months, and whether or not an immigration route to replace the "investor visa" route is introduced, I expect the UK to continue to remain attractive as a place for individuals and families to live and invest."
Annabel Dean, a partner in the residential property team at Farrer & Co, added that “UK residential property retains its appeal to international investors. The UK remains a place where international families want to stay and live particularly from an educational and cultural perspective. We are expecting particular interest from Middle Eastern and US buyers as those nationalities remain cash rich and keen to invest their wealth outside their home countries.”
Domestically, Ms Dean said she expected the residential property market to continue to be slow, but was hopeful of slightly more activity in 2024.
“The main reasons for the slow market are lack of stock and price uncertainty,” she explained. “We are expecting some more forced sales as we enter 2024 plus some more motivated sellers who wish to sell ahead of the general election or have simply waited long enough and now need to sell. This should increase stock levels. Prices should start to settle as transaction levels increase and if mortgage interest rates plateau as 2024 progresses as expected.”
According to Tom Brown, managing director, real estate at Ingenious, “housing remains a fundamental political issue here in the UK and ranks highly on the list of concerns for voters up and down the country.
“As such, it is imperative for every political party, regardless of its affiliation, to include comprehensive policies addressing the core issues of supply and affordability in their manifesto commitments. We don’t expect to see a significantly different approach should a change of national government take place during 2024. Many of the issues on the ground relate to local planning policies and decisions which continues to be a big challenge for developers to navigate. The position on the ground locally seems unlikely to be radically altered by a change in national politics.”
Elsewhere, Richard McDermott, a partner at Farrer & Co, said he expected there to be even more pressure – from a variety of stakeholders across the sector – for a significant reduction in the time it is currently taking for the Probate Registry to deal with probate applications.
“Delays to probate applications have been a real challenge for the sector, and I hope to see further action taken to tackle this in 2024.
“Additionally, I expect that unfortunately there will be more probate disputes on the horizon. These are increasingly being driven by doubts over the validity of Wills executed electronically during the pandemic, alongside doubts over the deceased’s mental capacity upon making their Will.”