Charlton House FAQS for Tax and Financial Planning

Why should I review and take advice on my finances before moving to the UK?

Hong Kong has a simple, low tax system, with no income or capital gains taxes on investments. The maximum rate of salary tax is the flat rate of 15%.

In comparison, the UK operates a complex and high tax system. Typically, with a 45% top rate of income tax, but in some circumstances, you could pay an effective income tax rate of 60%. You will also be subject to National Insurance, a type of taxation, on any employment or self-employment income.

There are a number tax and financial planning opportunities that exist that need to be considered well in advance and as part of a broader overall plan. Some of this planning needs to be executed before you leave Hong Kong. Some planning can only be undertaken once you are resident in the UK.

Not getting this right could result in you having to delay your move or if that’s not possible, potentially face a significant and totally avoidable tax bill.

Will I need to pay UK tax on my non-UK investments

The default answer is yes. Any interest, dividends and realised capital gains from overseas will be subject to UK taxes.

Your first step however is to establish what your domicile is and how this may be affected by your move to the UK.

If you are non-UK domiciled, you can elect to be taxed on the Remittance Basis. An advantage of this is that investment income and capital gains you make whilst UK resident that are not brought into the UK will not be subject to UK taxes.

This is a very complex area where specialist professional advice should be sought. Getting this wrong can have serious irreversible consequences, potentially many years in the future.

When should I start the process of reviewing my tax and financial planning?

In short, as soon as possible.

It may be advisable to sell assets or hold them in more tax efficient ownership structures and this takes time, especially with illiquid assets such as property.

The UK tax year runs from 6th April to 5th April. Under certain circumstances, the tax year can be split into 2 distinct periods; an earlier period of non-UK tax residence and a latter period of UK tax residence. However, whether this ‘split year’ treatment will apply is not always clear. Therefore, avoid any uncertainty by carrying out any planning in the UK tax year before your arrival.

 Charlton House Wealth Management