top of page
AW_Official Logo.png
AW_Official Logo.png
Writer's pictureJames Hartland

Advising Clients on Escaping Looming Tax Traps Through Strategic Relocation

Updated: Nov 1


Why are many hard-working business people and international citizens working in the UK already deciding to pack their bags and leave?


 Careful consideration involved in relocating internationally for a better quality of life

Brexit has regrettably hastened the decline of the UK economy, with proposed changes to domicile regulations likely further to prompt an exodus of wealth from the country. The UK's appeal to international investors and residents has also diminished significantly under the recent Conservative government due to concerns around mismanagement and transparency.


As the UK’s appeal wanes for foreign investors and an increasing number of wealthy individuals seek “friendlier destinations” with a higher quality of life, the new government faces a daunting challenge in balancing the books.


The shifting economic landscape has prompted some UK tax professionals to voice stark warnings, with one remarking, “Nobody with any money should consider living in the UK.” The rapid pace of these changes is expected to impact not only the affluent but also those who are moderately well-off as the government moves toward tax hikes aimed at closing the deficit left by the prior administration’s fiscal mismanagement.



Non-Dom Reforms Prompt a Surge in Enquiries Abroad


Meanwhile, legal and financial advisors across Europe, Asia, and the Middle East report a surge in inquiries, primarily driven by the proposed abolition of the UK’s long-standing non-domicile status. Many industry experts warn that the Treasury may not fully understand the consequences of scrapping this policy, initially designed to establish London as a global trading hub. With capital flight and reduced tax revenue on the horizon, the implications of this shift could be profound for the UK economy.


The abolition of various reliefs, which made it possible to pass businesses down the generations without massive tax implications, is just as concerning for family businesses established over the generations. The changes being planned to balance the budget in the UK will only accelerate the decline in the UK economy and a faster exodus of people moving abroad.


So, usher in a new era and a jump in the number of UK-domiciled individuals thinking about heading offshore. This will not only be a difficult decision for many but also complex, with many factors to consider, not least where to move. Previously, when the UK experienced austerity and high taxes in past decades, the choice of where to move was very limited. Now, countries all around the world compete to attract not only wealth but also talent.



Implications of UK Domicile Rules on Taxation

Implications of UK Domicile Rules on Taxation


If you are UK-domiciled, you are subject to inheritance tax on death and capital gains tax on any profits made from the disposal of assets in the UK, wherever you live, and whatever your nationality. This may change in April 2025 under the new ‘non-dom proposals’, but any benefits will take a while to become effective for those who do move offshore, and a proper understanding of this is essential.


So, how do you move domicile? To move your domicile, you need to sever all ties with the UK. Where it’s difficult for people who want to move their domicile but want to keep their business in the UK, you cannot own property, derive any income from the UK, or even scatter your ashes in the UK (as a UK national found to his family’s cost). You need to be able to demonstrate that you have made permanent ties to the new country where you are moving.


Getting information and advice on all the options will not be easy as very few practitioners can cover all the different jurisdictions you may want to consider moving to. Your UK tax accountant or financial planner will also be out of their depth and highly unlikely to recommend this due to the ‘code of conduct’ issues they are forced to embrace as UK practitioners.


The reality is that there are, however, now a multitude of countries to choose from that can welcome you with open arms. In return, they will most likely want you to invest significantly in a property or business. In return, you are likely to be offered a far better quality of life, and in most of these countries, you will be paying a lot less tax.


The most obvious choices for many will be the Mediterranean European countries like Spain and Portugal, which are already seeing a massive boom in construction and people moving to live. Prices are not cheap as there is competition from those fleeing the effects of the war in Europe. These countries also benefit from the changing times when families and individuals can relocate to Spain and Portugal from Northern Europe while still working remotely for companies with less favorable climates.


Over the past decades, many Brits have already relocated to other destinations, including the Gulf Countries, particularly Dubai, as well as Asia and other destinations due to a better lifestyle and better economic prospects. This trend has been happening for decades but is accelerating in the UK as the economy and quality of life continue to deteriorate.


Big moves like this need careful and long-term planning, and this kind of advice is not easily accessed. It involves making decisions about where to move to and what the implications are with regard to tax and working. Invariably, those who move will almost certainly have spent time in any country where they decide to move and may even already have property or various other interests there.



Astra Worldwide Advising Clients on Tax Considerations

Across Multiple Jurisdictions


Working with a practitioner who lives in this world, has experience doing this, and has strong international experience in many jurisdictions will be essential. Astra Worldwide has practitioners all over the world and works with partners who understand the different types of ‘golden visas’ and tax considerations across multiple jurisdictions. Being independent and international financial practitioners also enables us to help clients make the right decisions concerning both their long and short-term financial journey.


As the UK government appears to be planning a shift from a domicile-based system to a residence-based IHT system, this would keep a person’s worldwide assets under UK IHT for up to 10 years after leaving the UK. But could this mean that after 10 years of living abroad, non-UK assets would no longer fall under the UK IHT net, providing an opportunity for expats?


As the winds of change strengthen in the UK, bringing further changes that will undoubtedly worsen the quality of life and increase the tax burden for those with more people will move. The question is where to go, as there are multiple choices, and they are only getting better. For those unfamiliar with the opportunities and implications of choosing various destinations without advice or with the wrong advice, it is likely their new life will not get off to a great start due to poor planning.



The Need for Long-Term Planning and Expert Advice


Advising clients on relocating requires careful planning, often involving visits to and investments in the new location. Working with an international practitioner who understands jurisdictional complexities is crucial, as robo-advice simply cannot replace human expertise in these decisions.



We are giving a Special Offer for Those Considering a Move.


For those ready to begin their journey, Astra Worldwide is offering a discounted coaching session of £150 for 45 minutes. Contact us today—this may be your best investment on the path to a new and rewarding life abroad.







Komentarze


bottom of page