Why the UK Still Deserves a Seat at the Table for Family Offices and Investment Fund Structures

It may feel counter‑intuitive to talk about the UK in the context of family office or investment fund structuring at a time when many globally mobile families and businesses are questioning their future here. The tax landscape is constantly shifting, confidence has taken a knock, and headlines tend to focus on departures rather than arrivals.

But stepping back, does the UK still offer real advantages for certain types of fund managers and family offices? The answer is rarely binary, and taking a holistic view remains essential. The UK continues to offer structural advantages, and the right strategy often lies in knowing what to place (or retain) in the UK, rather than adopting an all-or-nothing approach.

Is the UK Still an Attractive Jurisdiction?

Despite the doom and gloom (much of which is understandable), the UK retains strengths that can make it a competitive investment company jurisdiction, depending on specific circumstances and factors relevant to family groups and fund managers. The exemption for dividends and chargeable gains, no withholding tax on dividends, and the absence of capital duties all help. Combine that with a high‑quality treaty network – still one of the most extensive globally – and the UK can still be seen as compelling for certain cross-border structures.  

Many also prefer the familiarity of UK company law, the well‑trodden legal framework, and a highly developed (albeit at times complex) tax regime.

Several UK incentives continue to underpin the UK’s attractiveness for fund managers and investment-led family offices, including:

• Tax exemption for fund managers: Updated rules allow UK-based managers to act without automatically pulling offshore funds into the UK tax net.
• Simplified regime for fund holding companies: Designed to make UK structures more competitive by streamlining taxation. For wealthy UK‑based families and fund managers seeking a credible, treaty‑friendly investment platform, this provides a good potential alternative to other European jurisdictions.
• Participation exemption and treaty access: Still among the strongest globally, allowing certain dividends and gains to be exempt while benefiting from the UK’s extensive treaty network.
• Long‑Term Asset Fund: A relatively new UK‑authorised fund structure designed to facilitate investment in long‑term, often illiquid assets such as infrastructure, private equity, venture capital, and real estate. For family offices and investment funds, this offers a regulated vehicle with flexibility to hold illiquid investments, combined with the credibility of regulatory oversight.

That said, the UK’s carried interest regime is currently under review, with draft legislation set to bring carried interest fully into the income tax framework from April 2026, with effective rates around 34%. This is higher than in many other European jurisdictions, though the UK does retain advantages in terms of legal certainty, established fund infrastructure, and access to talent – factors that may offset headline rate comparisons.

Non‑Investment Family Offices – Still Viable if the Family Is UK‑Based

For families who genuinely live in the UK and use their family office infrastructure here, UK‑based holding or service structures can still be entirely viable. Many families prefer to centralise governance, reporting, philanthropy management, and treasury functions close to where the principals actually live. When that reality aligns with the tax profile, UK‑based family offices continue to make sense.

Investment‑Focused Family Offices and Funds – A More Strategic Approach?

For investment‑led family offices, the question becomes more nuanced. Some families place only the UK manager or advisory entity here – relying on the tax exemption for investment managers to protect offshore investment vehicles – while keeping the investment structures elsewhere. Others anchor their investment vehicles in the UK and leverage treaty access and participation exemptions.  

The point is flexibility: the UK can play host to the manager, the investment entity, or just one layer of the stack. The optimal decision depends on asset classes, geography, personnel, and long‑term strategy.

The New Foreign Income and Gains Regime — Still Relevant for Some

The foreign income and gains regime is not the non‑domiciled regime we once knew, and its appeal is significantly narrower. But it does still offer meaningful benefits: for those planning a move to the UK for business, governance, education, or lifestyle reasons, the ability to shelter certain foreign income and gains for a limited period can still tilt the balance. It is no longer a blanket incentive, but for the right profile, it remains a useful part of the toolbox.

Non‑Tax Benefits – Stability, Infrastructure and Talent

Tax is only part of the story. The UK continues to offer deep pools of professional talent in law, finance, and advisory services. London remains a global hub for capital markets, deal‑making, and governance infrastructure. Families often value the rule of law, independent judiciary, and predictable regulatory environment. Add to this world‑class education, healthcare, and cultural institutions, and the UK can retain a gravitational pull that is hard to replicate elsewhere.

If You Do Decide to Leave, Don’t Sleepwalk Into the Pitfalls

If the final conclusion is to move abroad (which will be the logical next step for some), the real work starts before departure. Setting up a company in another jurisdiction can be easy, but setting it up correctly so it holds up under the relevant tax and non‑tax rules is far more complex. Individuals and groups need to assess tax residence of the relevant companies and structures involved, consider UK anti‑avoidance rules, and ensure that any new structures have appropriate substance in the relevant jurisdictions. Above all, it is important that one’s personal residency position is watertight and, in particular, that double tax treaties apply to the individual as intended. Nothing is more painful than leaving the UK only to find a letter from the tax authorities suggesting that you never really left for tax purposes. Compliance and record‑keeping are key.

The practicalities matter too: local tax authorities can be aggressive, administrative burdens differ widely, and non‑tax considerations – succession planning, healthcare, insurance, education, infrastructure – often prove decisive.

Final Thought

While there are clear and significant headwinds for the UK for many family offices and investment fund structures, the UK can still offer a blend of tax incentives, legal stability, infrastructure, and talent that continue to make it the right choice. The UK may no longer invariably be the default, but it remains a contender.

The key is to take a holistic view, weigh both tax and non‑tax factors, and make an informed decision based on specific circumstances.

This article was originally published by EPrivateClient.

Read the original piece here.