Free updates are notified at any time
Just register UK tax Myft Digest – Deliver directly to your inbox.
For most people, moving one time in a lifetime is enough. For a small group of wealthy people who want to avoid the UK estate tax, moving every 10 years is starting to attract people.
Prime Minister Rachel Reeves’ changes to inheritance tax in the budget last year meant that after spending a decade abroad, the British no longer bear the responsibility for inheritance tax. They can then reside in the UK for the next nine years and then apply their death duty again.
This may involve some pathological calculations to understand how long the fugitives who fled back to England would expect.
Catrin Harrison, a partner in the speech by law firm Charles Russell, said the plan could be seen as “creepy” and that “if I came back at 90, I could die within nine years.”
Anthony Whatling, managing director of consulting firm Alvarez & Marsal, said the prospect of having escaped IHT networks for a decade abroad could prompt those affected to leave for a second time.
“We expect many people to take the initiative to manage their residency and have the potential to leave again in nine years,” he said.
Stephen Kenny, a partner at PKF Littlejohn, said the way to go out is “a practical strategy for the right customer in the right situation”.
Among those looking overseas, Milan has proven to be a popular destination as Italy offers an annual fee of 200,000 euros in unlimited foreign income onshore. Emerging financial centers in the United Arab Emirates have also been attracted.
Christopher Groves, a partner at Withers Law Firm, said a series of actions taken by the rich will become more common. “As more and more governments propose [tax-attractive residencies] Going forward, they come with a limited time range. Unless you want to go to Switzerland or Monaco, you have to plan a fixed number of years. ” he said.
The UK’s new foreign income and income (figs) means that the sources of these wealth have been fully tax-free for four years, for individuals who have been non-resident for ten years. The Italian tax plan is valid for 15 years, while Spain lasts for six years.
Groves said some of his clients, both non-DOMS and British business owners, left the UK with a “10-year horizon”, although there was no specific intention to return.
“They may move back to the UK again because it will be an option, but it’s equally possible in the US or elsewhere,” he said.
Reeves encouraged short-term arrivals by replacing the available 15-year old non-disease regime and provided a four-year new system. They also have to leave after nine years to avoid death duty.
Nimesh Shah, CEO of consulting firm Blick Rothenberg, said the fig regime attracted some British people who have lived outside the UK for more than a decade.
He added: “Some of the returning British people are planning to stay for a short time to take advantage of the regime and then leave within the window of four to ten years.”
Groves said any long-term plan is subject to a “general feeling of distrust of the government…the current regime still has a slim chance of 20 years.”
But Kenny warned against planning around these strategies: “People shouldn’t let tax tails swing dogs.”
