For years, UK pension pots sat outside the inheritance tax net. Many higher-net-worth savers quietly treated their pension as a tax-efficient vehicle for passing wealth to the next generation – contributing beyond their own retirement needs and leaving the surplus to grow, untouched. That strategy is about to close. From April 2027, unused UK pension funds will fall within the scope of inheritance tax at 40 per cent – a change announced in the November 2024 Budget that is already reshaping how advisers think about retirement and estate planning simultaneously. For UK expats in Hong Kong, Singapore, the UAE and beyond, the implications are considerable. The rule change does not only affect UK residents. It also captures those who have been non-UK tax resident for years but still hold UK pension assets. What Is Changing and When Until recently, UK pension funds benefited from a near-total exemption from inheritance tax. The exemption was introduced by former chancellor George Osborne in 2015, allowing pension holders to pass on unused retirement savings free of IHT – a loophole that those with means used extensively. That exemption is being removed. From April 2027, pension funds will be treated as part of the estate for IHT purposes, exposing them to the standard 40 per cent charge on assets above the nil-rate band of £325,000. The compounding effect is significant. Where a pension beneficiary is also subject to income tax on withdrawals, analysis by Rachel Vahey at AJ Bell suggests that for every £100 held in pension on death, IHT can reduce the pot by £40 – and income tax on what remains could absorb a further £67 in certain circumstances. The 50 Per Cent Withholding Rule In May 2026, HMRC confirmed a further administrative measure: pension schemes will be permitted to withhold up to 50 per cent of a pension pot for up to 15 months in cases where the estate executor believes an IHT liability may arise. Interest begins accruing to HMRC at the six-month point. Experts have warned this mechanism will increase complexity and risk creating family tensions, particularly where estate executors are themselves family members and must hold back funds intended for other beneficiaries. “Estate disputes already cause family friction, and this will only exacerbate matters. People rightly worry that their financial legacy can cause family rifts.” – Rachel Vahey, AJ Bell Government projections suggest the pension IHT changes will pull an additional 10,500 estates into the IHT net by 2027-28, while a further 38,500 will face higher tax bills – at an average additional cost of £34,000. What This Means for Expat Investors The reach of these changes extends well beyond UK residents. Tim Smith, legal director at Eversheds Sutherland, has noted that the pension IHT change will capture those not tax resident in the UK but who hold UK-based pensions – a category that includes a significant number of British expats working across Asia and the Middle East. Rethinking the Pension as a Legacy Tool The fundamental shift is that saving into a UK pension beyond your own retirement needs now carries a tax cost. Estate planners have begun categorising surplus capital as what they call “red money” – funds that would pass to descendants – and the pension is no longer an efficient home for it. “Saving beyond what you need is falling out of favour for IHT reasons, and any surplus needs a plan,” says Les Cameron, retirement savings and tax expert at M&G. Acting Before the Deadline The consensus among advisers is clear: waiting is the most expensive option. Claire Trott, head of advice at St James’s Place, advises clients to map what capital they hold and what they need for end-of-life costs – and to plan the remainder explicitly. Options include spending down pension assets earlier in retirement, gifting from surplus income under the regular gifts exemption, placing assets into trust structures, or taking tax-free cash from UK pensions before relocating abroad. For expats considering a permanent return to the UK, the Foreign Income and Gains regime – introduced in April 2025 – allows overseas capital gains and income to be realised tax-free within the UK for up to four years after returning. There is also a pension carry-forward mechanism allowing returning expats to mop up three prior years of unused pension allowances, worth up to £180,000 gross. For those planning to retire abroad, Kevin O’Shea at RBC Wealth Management advises taking the tax-free cash portion of a pension before relocating, as pension withdrawals may be taxed in the new country of residence. There is also growing interest in transferring to a Qualifying Recognised Overseas Pension Scheme (QROPS), which can help pensions escape UK IHT once an individual has been non-UK tax resident for at least 10 years. The Life Insurance Response Demand for whole-of-life insurance policies – which pay a guaranteed sum to beneficiaries on death and, when held in trust, sit outside the taxable estate – has surged. Evelyn Partners reported a 66 per cent increase in cases processed in 2025, while Royal London’s insurance arm sold 50 per cent more whole-of-life policies over the same period. Legal & General reported a 500 per cent increase in the value of whole-of-life sales between Q1 2024 and Q4 2025, with much of that growth attributed directly to rising demand for policies that cover IHT costs on pensions following the Budget announcement. These policies are particularly relevant for expats who want to keep UK assets intact – including property or business interests – while ensuring the IHT bill does not force a sale or create a funding crisis for executors. The Wider Planning Question The pension changes do not sit in isolation. They are part of a broader tightening of the UK’s inheritance tax framework that includes changes to agricultural and business property relief, the removal of non-dom protections, and the extension of IHT to certain worldwide trust assets. For UK expats with ties to the UK – whether through property, pensions, business ownership

“Capital preservation is an active discipline, not a passive default.”◆ “The structure around your wealth matters more than the returns inside it.”◆ “The investor who was well-structured five years ago may find their arrangements are no longer fit for purpose today.”◆ “A favourable tax environment is not a strategy. It is a starting point.”◆ “Capital preservation is an active discipline, not a passive default.”◆ “The structure around your wealth matters more than the returns inside it.”◆ “The investor who was well-structured five years ago may find their arrangements are no longer fit for purpose today.”◆ “A favourable tax environment is not a strategy. It is a starting point.”◆ Overview The Challenge Four Pillars United Kingdom Middle East Hong Kong Singapore In Practice Your Adviser Speak With Us For investors based in the UK, Middle East, Hong Kong or Singapore, the answer to that question looks different in each location. The tax environment is different. The legal infrastructure is different. The risks are different. What does not change is the core principle: capital preservation is an active discipline, not a passive default. This article sets out the primary strategies that internationally mobile, high-net-worth investors use to protect wealth across borders and over time, with specific reference to the environments in which many of our clients operate. $13TPrivate markets AUM globally 40%UK IHT rate on worldwide estate 3,384Single family offices in HK (2025) 10yrUK residency threshold for global IHT The Challenge Why Expat Investors Face a Distinct Set of Wealth Preservation Challenges Domestic investors deal with a single regulatory environment, a single currency, and a single inheritance framework. Expats deal with all of these simultaneously, often across several jurisdictions at once. That complexity is not merely administrative; it translates directly into financial risk if left unmanaged. The pitfalls are numerous: pension assets left in a home jurisdiction that grows increasingly hostile to offshore wealth, insurance and investment structures that are inefficient from a cross-border tax perspective, real estate held in personal names that creates unnecessary inheritance tax exposure, and liquid assets sitting in accounts that generate no meaningful return while losing ground to inflation. Add to this the ongoing tax reform programmes being introduced by Western governments, and the challenge intensifies. The investor who was financially well-structured five years ago may find that their arrangements are no longer fit for purpose today. Framework The Four Pillars of Capital Preservation for HNW Expats Effective wealth preservation rests on four interconnected foundations: structure, diversification, efficiency, and planning. These are not sequential steps but parallel disciplines that require regular review as circumstances change. 1. Structural Protection One of the most consistently underused tools among privately wealthy individuals is the separation of personal ownership from legal ownership through appropriate structures. Trusts, foundations, special purpose vehicles and holding companies are legitimate and widely used instruments for protecting wealth from personal liability, simplifying succession, and creating clarity of ownership across borders. 2. Currency and Geographic Diversification Concentration risk in a single currency or single market is one of the more common and more damaging exposures for expat investors. For HNW clients operating across the Gulf, Hong Kong and Singapore, holding assets across multiple currency bases — including USD, SGD, HKD and CHF — provides a degree of insulation from any single currency deterioration. 3. Tax Efficiency Across Jurisdictions Tax efficiency is not avoidance. It is the straightforward objective of ensuring that an investor’s financial structures are correctly aligned with their residency status, domicile, and the tax treaty framework of the jurisdictions in which they operate. Poorly structured arrangements can result in double taxation, unexpected inheritance tax liability, or income that falls into the wrong tax net entirely. 4. Succession and Estate Planning Generational wealth transfer is where the gap between intention and outcome is widest. Assets that have been carefully built over a working lifetime can be materially depleted at the point of transfer if the legal and tax framework has not been addressed in advance. The investors who preserve wealth most effectively over the long term are not those who make the highest-returning calls. They are those who have done the structural work. Ready to review your current arrangements? Our estate planning consultation covers structure, succession, and cross-border tax efficiency. Book a Consultation About Carey Suen Market Focus The United Kingdom: A Fundamentally Changed Tax Landscape United Kingdom Key Shift: April 2025 The End of the Non-Dom Regime The remittance basis is gone. In its place: the Foreign Income and Gains (FIG) regime, a four-year exemption for those returning after ten or more years of non-residence. Worldwide income taxed on an arising basis 40% IHT on global estate after 10 years UK residency Exposure tail: 3–10 years post-departure Urgent review required for all British expats The New Inheritance Tax Exposure Any individual who has been a UK tax resident for ten out of the previous twenty tax years becomes subject to UK IHT on their worldwide estate at forty per cent. For those with twenty or more years of UK residency, the exposure tail extends to ten years post-departure. For British expats with substantial assets held offshore, this is a material and urgent planning consideration. Assets that were previously outside the IHT perimeter may now fall squarely within it, depending on the individual’s residency history. Market Focus The Middle East: Structural Advantages That Require Active Management UAE / Middle East Key Advantage Zero Income Tax Environment No personal income tax, a USD-pegged currency stable since 1997, and removal from both the FATF grey list and the EU high-risk list. No personal income tax on earnings AED-USD peg since 1997 DIFC Foundations and ADGM SPVs available Removed from FATF grey list (2024) What Gulf-Based Expats Need to Manage The absence of a state-sponsored pension scheme for expatriates means that wealth accumulation for retirement is entirely a personal responsibility. Expats who have moved through multiple jurisdictions frequently arrive in the Gulf with fragmented pension arrangements that have never been consolidated or reviewed for their current position. There is