diff --git a/test/framework/clusterctl/clusterctl_helpers.go b/test/framework/clusterctl/clusterctl_helpers.go
index 508b657cd7f8..abe1b82b3cb2 100644
--- a/test/framework/clusterctl/clusterctl_helpers.go
+++ b/test/framework/clusterctl/clusterctl_helpers.go
@@ -191,7 +191,14 @@ func UpgradeManagementClusterAndWait(ctx context.Context, input UpgradeManagemen
 	client := input.ClusterProxy.GetClient()
 
 	log.Logf("Waiting for provider controllers to be running")
-	controllersDeployments := framework.GetControllerDeployments(ctx, framework.GetControllerDeploymentsInput{Lister: client})
+	controllersDeployments := framework.GetControllerDeployments(ctx, framework.GetControllerDeploymentsInput{
+		Lister: client,
+		// This namespace has been dropped in v0.4.x.
+		// We have to exclude this namespace here as after an upgrade from v0.3x there won't
+		// be a controller in this namespace anymore and if we wait for it to come up the test would fail.
+		// Note: We can drop this as soon as we don't have a test upgrading from v0.3.x anymore.
+		ExcludeNamespaces: []string{"capi-webhook-system"},
+	})
 	Expect(controllersDeployments).ToNot(BeEmpty(), "The list of controller deployments should not be empty")
 	for _, deployment := range controllersDeployments {
 		framework.WaitForDeploymentsAvailable(ctx, framework.WaitForDeploymentsAvailableInput{