A new life in the UK may mean acquiring a UK domicile of choice
The new visa introduced by the UK at the end of January will give some 5 million Hong Kong residents the right to come and live in the UK and eventually become citizens. The UK government believes they have no choice but to give the Hong Kong people the option and they were obliged to fulfill the historic commitment to them.
For wealthy Hong Kong individuals with foreign assets, it is important for them to seek professional advice in respect of the tax risks that they may face should they decide to make a permanent move to the UK.
If these families make a decision to move permanently to the UK by applying for citizenship and acquiring a home here while also significantly reducing their connections with Hong Kong i.e. selling overseas property and transferring investments to the UK, HM Revenue & Customs may contend this provides enough evidence that they have acquired a domicile of choice in the UK.
As a result, this may mean UK residence and UK domicile may be applicable as soon as they arrive and so they may be taxable on their worldwide income and gains. Also, they will enter the UK Inheritance Tax (IHT) net and be subject to IHT on their worldwide assets. There is no option for them to claim the remittance basis of taxation afforded to non-domiciled individuals.
The decision to leave Hong Kong will be one considered very carefully by families and their UK tax position must be part of this planning. It is prudent to carry out such planning well before the actual move and Alliotts LLP can assist you with investment planning such as putting a trust structure in place, to ensure non-UK situs assets are ring-fenced and remain outside of the scope of UK IHT and the trust regime which levies 10-year charges during the lifetime of the trust.
If you are considering a move to the UK please contact our team of experienced, multi-lingual tax advisors for specialist advice and assistance.