Relocating to the UK: Tax, Visa and Financial Issues
In the dynamic landscape following the UK's exit from the EU, understanding the changes in tax residency and VISA requirements is more crucial than ever.
This newsletter serves as your concise guide to the complexities of becoming a UK tax resident, the strategic use of the remittance basis of taxation, and the imperative of pre-arrival financial planning. With recent shifts in VISA pathways, including the introduction of the Innovator Founder Visa and changes to business investment routes, our focus is to equip you with the knowledge to navigate these waters smoothly.
Whether you are an individual planning a move, a business owner, or a skilled professional, this edition is tailored to illuminate the path of your UK relocation venture.
UK Tax Residency
Becoming or ceasing to be resident in the UK for tax purposes involves navigating a complex set of criteria. Factors such as the number of days spent in the UK, family ties, available accommodation and work commitments all play a role. Seeking professional advice at the outset is essential, as it can significantly impact an individual's tax obligations. Business owners face additional challenges, particularly when it comes to the governance and operational structuring of their companies. This highlights the importance of meticulous planning and strategic management, ensuring adverse tax implications are minimised.
The remittance basis of taxation offers a unique opportunity for certain individuals to manage their UK tax liabilities. Under this system, foreign income and gains are only subject to UK tax when brought to or used in the UK. However, this approach is not one-size-fits-all, for example for US citizens who face global taxation. For remittance basis users, navigating the intricacies of the relevant tax regulations requires expert guidance. Understanding the nuances of international tax law is also crucial to optimizing the remittance basis, ensuring individuals meet their obligations while maximising tax efficiency.
Clean Capital and Funding
Pre-arrival planning goes beyond tax considerations; it involves structuring finances for a seamless transition. Setting aside 'clean capital' - funds that can be brought into the UK without incurring tax - requires careful financial planning. Evaluating funding sources for UK expenditure is equally vital. Will individuals rely on a UK remuneration, overseas funds, or receive gifts from family members? Each source carries unique tax implications, and understanding these nuances is essential. By strategically aligning funding sources and capital, individuals can establish a strong financial foundation in the UK, paving the way for a successful and tax-efficient relocation.
UK Visa Requirements
Following the UK exit from the EU, it is crucial to factor in Visa requirements alongside tax planning consideration. Particularly in light of the scrapping of the Investor Visa in February 2022, high-net-worth individuals, investors, business owners, and entrepreneurs are seeking alternative and viable ways to relocate to the UK. HEre is a brief insight into the main available routes:
UK Expansions Worker Visa
This route is tailored for overseas business owners and high-net-worth individuals aiming to establish a subsidiary of their overseas company/group in the UK. The process involves creating a basic UK company footprint, obtaining a temporary sponsor license, and allowing key employees to enter on Expansion Worker Visa. While temporary, this Visa can pave the way for long-term residency through Skilled Worker Visa.
Innovator Founder Visa
Introduced in April 2023, this Visa caters for entrepreneurs with innovative and scalable business proposals. Endorsement from Home Office approved bodies is essential. Unlike previous requirements, there is no minimum investment threshold, but specific criteria must be met for Indefinite Leave to Remain (ILR) after 3 years.
This route is designed for a "skilled" individual to come to the UK to do an eligible job with an approved employer. However, it can also be an option for overseas business owners and entrepreneurs to work in senior positions within their newly established UK company. It is important to note that this option will require a trusted contact resident in the UK who will take care of setting up the company and apply to register as an approved sponsor.
Global Talent Visa
For exceptional talents and leaders in various fields, the Global Talent Visa is also an option. Applicants recognised internationally can apply for this Visa, enabling them to work in the UK without sponsorship. Permanent settlement (Indefinite Leave to Remain) is attainable after 3 years for leaders and 5 years for potential leaders in their fields.
These routes offer diverse opportunities for your UK relocation journey. Each option has its unique requirements and benefits, ensuring a tailored approach to your specific circumstances and will need to be analysed by a professional advisor. Careful planning, both in terms of taxation and immigration, sets the foundation for a successful and stress-free relocation experience.