As the world shares in the celebrations for the weekend's Royal Wedding, there is no doubt that the UK is an appealing destination for HNWI. Opportunities for individuals to establish a home in the UK have fostered a diverse and culturally rich society that appeals to HNWI seeking not only tax efficiency, but also other benefits such as political stability, a cosmopolitan lifestyle, superior educational opportunities, a strong legal system…and to marry a Prince.
There are a number of practical considerations to take into account before moving to the UK. These include:
Know Your Visa Requirements
Individuals may think that because Megan Markle is marrying a British citizen the immigration law has no particular role to play. This is wrong! As a US citizen, Meghan Markle needs to apply for a visa to enter the UK and marry Prince Harry, and she is reported to have recently paid a flying visit to the United States to complete this requirement.
For HNWI not marrying a British citizen the most common immigration routes are:
Tier 1 (Investor)
HNWI with the ability to invest a minimum of £2 million in UK government bonds, share capital or loan capital in active and trading UK registered companies can apply to come without being sponsored. The individual must show that they hold these funds under their own unrestricted control and in a regulated financial institution. They need to demonstrate the origins of their funds and provide a suitable criminal record certificate for any country they lived in for 12 or more months in the past 10 years. The Tier 1 (Investor) category offers an accelerated route to settlement.
Tier 1 (Entrepreneur)
For foreign nationals seeking to establish or join a UK business, this visa could be the answer.
Whilst adherence to distinct rules for this visa type is necessary, the scheme has been modified. It now offers greater accessibility in relation to the amount of investment and the sources of funds. Entrepreneurs need to have access to £200,000 or more for investment into one or more UK businesses; or have access to at least £50,000 or more from regulated venture capital firms, specific UK entrepreneurial seed funding competitions or British government departments. Successful applicants can be accompanied by their dependants and the whole family can eventually apply for settlement.
Even a royal fairy tale wedding has to deal with mundane tax rules. Although Meghan Markle is independently wealthy, it has been speculated by the media that the Royal Family will give Meghan Markle an allowance now that she is married to Prince Harry. Whatever the case, the IRS will expect her to file her US taxes for as long as she is a US citizen.
HNWI must ensure that they meet their UK and home country tax obligations. Several countries have bilateral tax treaties in place to determine the rate at which a non-resident will be taxed on their income, pension, assets and dividends when relocating. It is advisable that the individuals find out the conditions of the relevant tax treaty (if any) with their home country. Many HNWI are concerned with structuring and protecting their assets. As such, they should seek tax advice before moving to the UK. They should undertake extensive research and ensure that they have the correct tax arrangements without fear of repercussions. With Brexit looming, tax (and other) rules and regulations should be monitored closely.
It is worth noting that HNWI who would like to obtain citizenship in the UK should ask their tax advisers before moving to the UK about non-dom tax rules.
It may sound obvious but HNWI need to seek advice on specific issues such as setting up a pension and other financial interests.
Unlike some HNWIs, Meghan Markle does not have to worry about finding a new home in the UK. It has been reported that she lives with her Prince at Nottingham Cottage in the grounds of Kensington Place.
If HNWI do not have a property already secured and would like to buy a new property in the UK, in addition to practicalities (e.g., estate agencies, property finders, SDLT, and legal fees, amongst others), consideration should also be given to Anti-Money Laundering Regulations as identification documents will need to be provided to register, for example, with law firms and real estate agents. This can sometimes provide challenges depending upon nationality of origin, personal background, and availability of original documents.
Alternatively, if planning to rent a property, it is now required to first obtain the necessary immigration permission to reside in the UK before being able to rent a property.
HNWI may want to weigh out the import taxes and costs of having personal effects like a car or furniture shipped down to the UK, or buying them locally.
Prepare for Change
Moving to another country often means adapting to a new culture and a new way of life. It can be a challenge, but with some good solid planning, patience and knowledge, settling in should be a breeze… whether or not it involves walking down a Windsor aisle.
Other topics HNWI should consider:
- Cultural training
- Financial planning and other investments
- Estate planning
- Military service
- Relocating pets
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