Below are some examples of the opportunities and challenges we respond to on behalf of wealth owners, their families and their other advisers.
Our US client told us she was coming to work in the UK for several years.
First we looked at how the UK-US tax and treaty rules would apply to her, and her earnings. Then we advised her to set up non-UK accounts to hold funds that she could bring into the UK tax free, but that would also be US tax efficient. We also advised her to retire as trustee of US trusts to avoid them becoming liable for additional UK and US taxes.
We helped our Eastern European client make a tax-efficient move to the UK. First we advised him to bring some funds into the UK before he became resident.
Then we helped structure his non-UK assets to deliver a tax-efficient flow of funds to the UK, setting up a suitable investment portfolio, and making sure that there was capital available to use in his ongoing business.
The UK non-dom tax regime encourages people to keep their money outside the UK, but timely planning can make sure a non-dom has a pot of money that can be used in the UK tax-free.Damian Bloom, Partner – Private Client
When you or a family member move to another country, you need to consider not just your personal assets, but also trusts and other structures which you have established, or from which you can benefit.Georgina James, Partner – Private Client
Our non-UK client bought a home in the UK and stayed there a number of times a year, visiting her daughter who was studying in the UK. She was concerned she might become tax resident.
We explained that under the statutory resident rules, she could spend up to 120 nights in the UK each year without becoming UK resident: she was not working in the UK, her daughter was not a minor, and she had not spent any significant time in the UK in previous years.
Our non-UK client accepted a job in the UK and he and his wife signed a lease on a London flat. They would clearly become UK tax residents.
We advised them to delay moving to the UK until the spring – after 5 April – so that we could put some tax planning in place in the tax year before they arrived.
The introduction of the UK statutory residence test has made it far simpler for individuals to determine if and when they will become UK tax resident.Damian Bloom, Partner – Private Client
Planning needs to be put in place in the tax year before you become UK resident.Paul Whitehead, Partner – Private Client
Some clients divide their time between several jurisdictions so as not to be tax-resident anywhere. Whilst attractive in principle, this has a number of practical difficulties: it needs careful monitoring to manage the multi-jurisdictional compliance.Murray North, Partner – Private Client
Our wealthy European client wanted to manage the tax impact of his move to the UK.
We explained that he could prevent his non-UK income and gains from being taxed in the UK and worked with him on pre-arrival planning. For example, any capital gains – like those from selling a property or a business – realised before he came to the UK would not be liable for UK tax, even if brought into the UK.
Our client, a highly paid Italian executive, was moving to the UK.
We made sure that for the first three years only her earnings for UK duties (and not her earnings for duties carried on outside the UK) would be subject to UK tax. After three years this would only be possible if she had two separate, unrelated onshore and offshore employments.
Expats need to be alert to the proposed changes to the UK tax rules which take effect from April 2017. The draconian rules mean that an expat could find themselves paying UK income tax and capital gains tax and exposed to inheritance tax on their worldwide assets if they return to the UK, even temporarily.Damian Bloom, Partner – Private Client
UK income will always be in the UK tax net. On becoming UK resident UK gains fall in too. For a non-dom, planning often means making sure income and gains arise, and remain outside the UK.Damian Bloom, Partner – Private Client
Our Italian client was moving from Italy to the UK and wanted to make sure he wasn’t taxed in both countries. We planned and documented his exit from Italy and his arrival in the UK – obtaining the certificate of UK residency required by the Italian authorities.
We helped him realise gains on certain assets – without an Italian or UK charge – and set up a tax-efficient UK asset-holding structure.
Our UK client, a beneficiary of an offshore trust, was moving to France to work.
French rules on trusts are rather draconian: both he and the trust would have faced significant tax charges. So we removed him as a beneficiary of the trust before he left the UK but made sure he could still have access to other family funds in the future. We also made sure he didn’t suffer double tax on his earned and investment income.
Regulation can force banks to give incorrect information to tax authorities about the client’s residence. Managing this is essential to avoid unnecessary enquiries.Damian Bloom, Partner – Private Client
When planning for family members, or the assets they hold, in different jurisdictions it is important to take tax advice in each jurisdiction as early as possible.Georgina James, Partner – Private Client
Our wealthy non-UK client wanted to buy a high value London home. We reviewed the tax implications and considered up-coming changes to taxes on owner-occupied residential property.
We advised that the best solution was to buy the property in her own name, and finance the acquisition to help mitigate the potential inheritance tax.
The piecemeal approach to taxation of UK residential property has led to an unhelpfully complex patchwork of overlapping tax charges.Damian Bloom, Partner – Private Client
Under the current tax regime, there is a strong argument for simply holding your home yourself.Sam Carver, Associate Director – Private Client
A UK client relocated to Singapore while his family stayed in the UK to avoid disrupting his children’s schooling.
We advised that under the statutory-residence test he does qualify as a non-UK resident despite his significant ties to the UK. This would be the case as long as he spends fewer than 91 days in the UK and fewer than 31 of these are working days.
Our UK resident non-UK domiciled client was surprised by tax changes that mean she will be liable for UK tax on her worldwide income and gains from April 2017.
We looked carefully at her situation – she’s retired, with adult children and significant offshore investment income – and mapped out the tax impacts of moving to several alternative jurisdictions, either immediately or in a few years, with some interim planning. Her current shortlist includes Switzerland and the UAE.
If you come to or leave the UK part way through a tax year, “split year” treatment can be available, but only in limited circumstances.Simon Phelps, Partner – Private Client
The loss of the remittance basis for those non-doms who’ve been in the UK for 15 years, is causing a number of wealthy individuals to the leave the UK. The difficult question is not how to leave, but where to go.Murray North, Partner – Private Client
“Regulation can force banks to give incorrect information to tax authorities. Managing this is essential.”Damian Bloom, Partner – Head of Private Client