Introduction
The recent announcements of tax increases in the October 2024 Budget have continued to spark a rise in the number of enquiries we receive from individuals considering relocating abroad.
One of the questions we often get asked by clients looking for advice is what the preferred destinations are, or seem to be, for people wanting to leave the UK.
Let’s take a look….
Whilst countries in Europe, like Portugal and Spain have traditionally been top of the list, following the abolition of the Non-Habitual Resident (NHR) Tax Regime (which was officially discontinued by the Portuguese government in 2023) we have definitely seen a reduction in popularity of Portugal as a destination of choice.
Unfortunately, Spain, which has proved popular with clients, seems to be following suit following the announcement that the Golden Visa programme (an immigration programme that allows individuals to gain residency in a country by making an eligible investment there), which was the preferred route to residency in Spain, is also to be abolished by Spain on 3rd April 2025.
Indeed it appears that even staying in the UK, but living part of the year in Spain may not be an option now either, following the recent Spanish government announcement (13th January 2025) that it plans to introduce a tax of up to 100% on properties purchased by non-residents from outside the EU. [1]
So what options remain for those wishing to leave the UK?
In a recent survey of professional advisers with internationally mobile high net-worth clients, the top destinations for those leaving the UK were Dubai (no income tax – what more is there to say!!), Italy (which as well as having a relatively attractive tax regime is doing a lot at the moment to encourage foreign investment and relocation[2]), and the “old favourites” like Malta, Cyprus, the Isle of Man and the Channel Islands. We also find we speak to quite a number of clients interested in moving to Barbados (well if the low tax rates aren’t appealing enough the palm trees and beaches certainly will be!).
A quick google suggests a number of different countries topping the list, like Australia, the USA , and France. However, with many of the clients we speak being driven by a desire, not for cultural or lifestyle changes, but to reduce their overall tax burden, these countries are unlikely to popular destinations for UK expats motivated by tax planning (…certainly not given that the US has one of the most complex and all-encompassing tax regimes of any country in the world!!).
Whilst it is not our job to advise clients on which country might suit their needs (whether cultural, family, lifestyle or tax/financial) we find ourselves having regular conversations with clients who know they want to leave the UK but are open to where they go, and can help introduce clients to advisers in other countries who can advise them on the local tax position.
How we can help
Those moving themselves, or their businesses, overseas face unique tax challenges.
At ETC Tax, we have specialists in global mobility tax issues who can advise employees, employers and/or business owners on their UK tax position when leaving the UK as well as help advise on their ongoing compliance and reporting obligations.
Our advice covers key areas such as residence, domicile[3], rental income from UK properties or other UK-sourced income, and non-resident capital gains tax. We also specialise in advising non-UK domiciled individuals on their UK tax position and planning for tax-efficient remittance of funds to the UK.
Finally, we can also provide support with UK tax returns for those with overseas aspects to their tax affairs, remittance basis claims, and overseas workday relief applications.
Next Steps
Whether you’re an individual navigating cross-border tax issues, a business operating internationally or a professional adviser assisting clients with these issues, feel free to get in touch to discuss things in more detail.
[1] Although the finer details about the implementation of this policy or the timeline for it are unclear, it is being compared to policies that are already in place in the likes of Canada and Denmark.
[2] Italy rolled out the little-known incentive in 2017, which has proven particularly attractive for high-net worths and super high-net worths. The incentive means that in exchange for paying an annual fee of €100,000 (£87,000), those who become resident in Italy are entirely exempt from paying tax on income generated overseas.
[3] We can also advise on the upcoming changes to the existing domicile rules (from 6 April 2025) and provide advice and planning in relation to those changes.
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