2024-03-14 11:15:58
Overseas Property Market｜Abolition of tax exemption for new immigrants!Hong Kong residents who immigrate to the UK only have one year left to process their overseas assets.
The UK recently released its Spring Budget, announcing that it would abolish the system whereby residents whose original place of residence is not the UK will not have to pay tax on their overseas income as long as they are not remitted to the UK. Industry insiders pointed out that under the new regulations, Hong Kong people who immigrated to the UK under the BNO visa “5+1” and received tax exemptions on the remittance basis should be disposed of as soon as possible if they still have undisposed assets in Hong Kong.
Foreign income tax exemption period reduced from 15 years to 4 years
British Chancellor of the Exchequer Hou Junwei announced in the spring “Budget” that the system of abolishing the non-domiciled (Non-Domicile) remittance system, as long as the overseas income is not remitted to the UK, will be abolished. . Starting from April 2025, non-UK residents of their original place of residence will not have to pay taxes on overseas income for the first four years, but then they will be in line with all UK residents. It is expected to bring in 2.7 billion pounds in treasury income in 2028 and 2029.
The UK is divided into domiciles and non-domiciles. The former are British people born in the UK, and the latter are new immigrants who immigrated to the UK from other places. Under the old system, generally new immigrants would automatically become domiciles following living there for 15 years. Becoming a domicile means global taxation, and assets within and outside the UK are subject to tax. Non-domicile means that assets within the UK are subject to tax, but overseas assets are not subject to tax. Billy, the head of Goodbye HK Hello UK in Hong Kong, said that the budget has a major impact on people who have immigrated to the UK in recent years. He said that from April next year, the tax concept of non-permanent residence will be abolished, which means that income earned from living overseas will not be able to Then obtain tax relief through the remittance system.
Overseas Property Market｜Abolition of tax exemption for new immigrants!Hong Kong residents who immigrate to the UK only have one year left to process their overseas assets.
Hong Kong assets are subject to tax even if they are not remitted to the UK
However, this budget announced that following living in the UK for four years, all overseas income and asset appreciation must pay UK tax. In addition, new immigrants can enjoy 100% tax exemption on overseas assets and income in the first 4 years. Tax residents who have lived in the UK for less than 4 years can still enjoy the discount for the remaining years, especially those who have just obtained a BNO visa. 4 years to deal with Hong Kong assets. He pointed out that for the first batch of Hong Kong people who immigrated to the UK with BNO visas and have lived in the UK for three years, it means that they only have regarding one year left to deal with overseas related assets. Otherwise, the assets left in Hong Kong will not be remitted to the UK, even if they have not been remitted to the UK. Taxes will also be imposed.
David, the managing director of Knightsbridge, who holds a professional qualification in British taxation, explained that the remittance system itself is just a temporary reporting of overseas assets by new immigrants to the British IRS. Under certain conditions, they only need to file a tax return and do not need to pay tax. If the income and asset structure of Hong Kong people who are new immigrants is “heavy on overseas assets and light on domestic assets in the UK”, the remittance system is definitely useful. However, “overseas assets are light and domestic assets are heavy”, the remittance system is of little use, so If you hold a lot of assets in Hong Kong, using the remittance system will temporarily “stop” overseas income taxation.
If the plan for repatriation tax avoidance following the “5+1” plan has ceased
The remittance system has a service life, which is generally 7 to 15 years. However, a high annual fee will be charged from the 8th year. From the 8th to the 12th year, an annual fee of 30,000 pounds (regarding 300,000 Hong Kong dollars) will be required. , the cost will increase to 60,000 pounds (regarding 600,000 Hong Kong dollars) per year from the 12th to the 14th year. By the 15th year, the British Internal Revenue Service has automatically upgraded non-resident immigrants to domicile. They can no longer use the remittance system and must file global taxes just like locals. David pointed out that the current BNO visa is “5+1”. Many Hong Kong people expect to obtain a British passport and identity in 6 years. Basically, following using the remittance system for 6 years, they can avoid taxes and payment if they plan to leave the UK. High annual fee. However, following the restructuring, it only lasted for four years, and fell into the tax net for two years in disguise.
Overseas Property Market｜Abolition of tax exemption for new immigrants!Hong Kong residents who immigrate to the UK only have one year left to process their overseas assets.
Experts advocate independent management of overseas accounts to avoid trouble and taxation.com
For those who plan to immigrate to the UK, he suggested that before immigrating to the UK, it is best to arrange an account with clean capital overseas, which is your “old capital”, a pure savings account, and the account needs to be managed independently, not a comprehensive account. Don’t mix other income into the mix. Because the UK is a global tax country, it will occasionally check the household registration status of new immigrants. If all the funds in and out of the account are mixed in the same account, there is a chance that they will be taxed.
Written by: Wendy Global Real Estate
The original article was published on AM730
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