Expat destinations positioned to gain from UK's Non-Dom status abolition

As the dust settles on Chancellor Jeremy Hunt’s Spring Budget, headlines and press coverage has focused on how the UK’s non-dom tax status will be abolished with a simplification of the rules introduced meaning those with the ‘broader shoulders’ will pay more tax.

Whilst this stands to raise £2.7bn for the UK, these less favourable terms for many international investors are likely to open the door to other jurisdictions such as the UAE and Switzerland who may now look more appealing from a wealth preservation point of view for high net worth individuals.

As well as having no income tax, the UAE has a number of residence visa options designed to entice international workers to their shores.

The recently launched Retirement Visa in Dubai has many benefits, primarily relating to tax exemption. As an international worker retiring in Dubai, you may potentially benefit from exemptions on your retirement income and investment gains.

Open to expats over the age of 55, to qualify for a retirement visa in Dubai, you must meet the following requirements:

• Monthly income of at least AED 20,000 (approx. £4,250) either from pensions or employment.
• Cash savings of at least AED 1million.
• Own a property of no less than AED 1million.
  

Switzerland has long been a top destination for high-net-worth expatriates and with many cantons offering tax incentives to individuals who choose to live in Switzerland while earning from foreign sources, its clear to see why. The Lump Sum Taxation permit allows non-Swiss nationals to pay a flat amount for taxes based on their lifestyle expenses and ignores any income and assets from outside Switzerland.

Although not available to residents of German speaking cantons such as Basel and Zurich, this unique legislation can have significant tax planning benefits for international workers.

These types of schemes aren’t just limited to Switzerland and the UAE. In Italy, new residents can elect to pay a substitute tax to their foreign income tax amounting to €100,000 per fiscal year, while the Bahamas offers permanent residency to investors buying a home valued at least $750,000.

When you have worked so hard to accumulate your wealth, it’s only natural you want to take steps to protect your assets. And while all of the above sound appealing, they come with terms and conditions, so it’s important to seek professional advice.

Budget Takeaways

Capital Gains Tax Rate Cut on Residential Property

The higher rate of Capital Gains Tax (CGT) on property will be cut from 28% to 24% from April 2024. This cut, designed to incentivise earlier disposal of second and buy to let homes could impact expats with, or considering building property portfolios.

National Insurance Cut

Following the 2p cut announced in the Autumn, Hunt confirmed an additional 2p cut will take the National Insurance rate down to 8% from April. He also stated his long-term ambition is to cut this again when possible. Meanwhile Income Tax levels remain the same.

British Isa Unveiled

A new ISA, providing savers with an additional £5,000 allowance on top of the existing £20,000 annual allowance is to be created. Although no start date has been revealed, the money invested through this vehicle will be directed exclusively to British businesses.

While the majority of the Budget will have little immediate impact on UK expats, you can read the Chancellor's statement in full by visiting www.gov.uk

Award Winning Advice

As an expat it’s easy to forget about our ties back home, however, it’s incredibly important to keep abreast of any changes, and the opportunities they may present to you. Skybound Wealth’s team of award winning, international financial planning experts are on hand to ensure you do just that. Request a complimentary consultation now.