Death and Taxes S5:E2 – Those coming to the UK – what to think about, what you need to do

The abolition of the UK’s non-dom rules in April 2025 has caused many individuals with UK and international connections to reconsider their personal, family and business plans. In today’s episode, we look at what those arriving in the UK need to consider from a UK tax and immigration perspective and I’m delighted to be joined by Ed Hayes and Myra Leung. Ed is a partner in the International Tax and Trust team, specialising in UK tax and estate planning advice for a range of international and UK based clients, often looking at complex structures and cross border issues. Myra is a senior associate in the same team and advises on complex issues and interactions between UK immigration and tax law, often focusing on pre-immigration tax planning. Born in Hong Kong, Myra is the only Death & Taxes member who speaks Cantonese and Mandarin.

So, Ed and Myra, episode one of this season looked at some of the issues for people when they’re thinking about leaving the UK, but we have all of us got examples of clients who are considering coming to the UK and there are in some cases tax reasons why the new changes suited them. But also there are commercial, family, cultural reasons why people might look to spend more time in the UK.
Ed, what are the main topics you want to talk about today?

Edward Hayes (01:47)

Sure, I thought I’d do a quick kind of 30 second summary before we get into more of the detail. So I the first point is, can you come to the UK and how will you do so? You know, what’s your visa and immigration position? Because that is more complex now than it possibly was in the past. Obviously, will you become a UK tax resident? And if so, when and how will that interact with your UK tax, sorry, with your tax exposure elsewhere, particularly in the context of double tax treaties and so forth? And some of this is just an aspect of working out what your possibilities are. But there’s a key part which is planning ahead of time and trying to make sure all of this suits your goals and that you are making changes where appropriate to your wealth ownership structures, perhaps your investment portfolio, such that actually you are going to be as tax efficient as possible when you arrive in the UK. And then for most people, once they have arrived here, it’s very important to take steps to update things like wills and estate planning just to make sure that these will reflect their kind of new reality. And so if we start with the visa and immigration aspect of this, Myra, do you mind giving us a kind of heads up on what are the key points people would think about?

Myra Leung (02:57)

So when someone wants to come to the UK, first of all, they need to think about the UK immigration rules and how they can move to the UK in the first place. So when they ask me what visa options there are for them, my first question is, do you have any UK connections? For example, someone who’s second generation British could be British by descent, or if they are third generation British, they could become eligible for British citizenship by registration.
If they don’t have any UK ancestry, then I go on to look at well, whether they’ve got any previous UK residence, for example, they might have had indefinite leave to remain or permanent residence. And if so, they could potentially revive this rather than making a new application. Moving on to visas, if they are a Commonwealth citizen with a UK born grandparent, then they could become eligible for UK ancestry visas. That’s why it’s important to ask the clients about their background to start off with.

The other options they’ve got are potentially the business immigration route, you’ve got the family route, Hong Kong BNO visa, student visa, global talent visa or work visas. Before I finish, one thing to note is that although the investor visa has stopped taking new applications since 2022, there are recent news articles about the possible revival. So watch this space.

Guy Broadfield (04:15)

Well, thanks very much for that whistle stop tour of the considerations, Myra. For those people, listeners who want to find out more, please do take a look at episode seven in season three of Death & Taxes, which set out the options and immigration considerations for high-net-worth clients that came out in June 2024 and those rules and considerations still apply. So please do take a look at that.
But Ed, as a tax and trust lawyer by background, I assume you would consider that anyone coming to the UK should of course think about tax in the first instance. So what would your initial consideration be?

Edward Hayes (04:55)

Absolutely. I think that the first question is, will you become UK tax resident? And if so, when? And it’s important to kind of reiterate that for most non-UK residents, their tax exposure in terms of UK tax is relatively limited. But once you become a UK tax resident, the default position is that you are exposed to UK tax on worldwide income and Gains. So there is a very big change of status and understanding how that rule impacts you is obviously going be key to any decision to move and the consequences that flow from that.

So I think a lot of people will be aware that we have a Statutory Residence Test which determines whether you are a UK tax resident. Always worth reminding people that the UK tax year is very odd. It’s not a calendar year. It runs from 6 April one year to 5 April the next. And that can cause complications when trying to marry up kind of a move from a country which has a different tax year.

But the way the UK Statutory Residence Test works, day counts are a core part of it. I think lots of people think of it as solely a day count test. That’s not quite right in that there are key thresholds to be aware of. So if you’re moving to the UK for the first time, usually 45, 90, or 120 days are going to be the thresholds you’re looking at, and depending on your circumstances and how connected to the UK you are it will be crossing one of those thresholds that will probably trigger UK residency. But those aren’t the only criteria. And particularly someone who is going to start having a home in the UK or indeed working in the UK, those are related but slightly distinct tests which can also trigger UK residence.

So the overall message is just make sure you take advice well before the timing of any move as to what will trigger your UK residence and when that will take effect from. We do have a concept called split year treatment so that if you move to the UK part way through one of our tax years, you may find that actually you only face kind of full UK tax exposure from what we call a split year date, i.e. some date during the course of that tax year rather than necessarily from 6 April of that tax year. But again, it’s a complex rule and care needs to be taken as to how it applies.

Once you’ve determined that you have become or will become UK tax resident, then the question of course is, well, what does that mean in practice for UK tax exposure? As I say, the default position is that you’re exposed to Income Tax and Capital Gains Tax on worldwide income gained. But we do have a new regime for some people that can offer some relief to that. And Myra, perhaps you could speak to that and give us summary.

Myra Leung (07:33)

Yes, thank you Ed. So the previous tax regime for non-doms known as the remittance basis has been abolished with effect from the 6th of April 2025 and this has been replaced by a new regime, which we refer to as the four year FIG regime and FIG stands for foreign income and Gains. So this is a special status and the people who are eligible for this are those who have been non-UK tax resident for at least 10 consecutive UK tax years before moving to the UK. So that’s why it’s really important to know your tax residence in the UK. This, as the name suggests, is available for four UK tax years and it applies to most forms of non-UK sourced income and Gains and the regime allow you to bring them into the UK tax free. It also relieves unemployment income derived from duties performed outside of the UK but there is a cap to this.

In order to benefit from this regime, you have to quantify, so count all your foreign income and Gains and specify which of those you want the new regime to apply. You have to claim that in your tax return. And for those who have been on the remittance basis previously, there are also additional considerations.

Edward Hayes (08:45)

Thanks Myra. I think it’s also a, that’s the Income Tax and Capital Gains Tax position. As for Inheritance Tax, which is of course a key concern for lots of people who are moving to the UK or starting to spend more time here than they previously have done because the UK is slightly unusual on the international stage in having an Inheritance Tax at all and having one at quite a higher rate at 40 % by default. So, determining when you become exposed to Inheritance Tax on worldwide assets is often very important to clients. So most people in the world only pay UK Inheritance Tax on UK situated assets. But once you become something called long-term resident, then you begin to be exposed to UK Inheritance Tax on your worldwide assets. And for most people, you’ll become long-term resident once you have been UK tax resident for 10 out of the previous 20 years. And the simplest version of that is if you move to the UK and then you’re here continuously, it’ll be the beginning of your 11th year of UK tax residence that you’ll become long-term resident.

So you have 10 years in which you have more limited Inheritance tax exposure. And I think that’s a planning period for lots of people because, as I say, Inheritance Tax is a huge factor for people. It’s something that lots of people coming to the UK won’t have had either at all or to the same extent in their previous jurisdiction. So, taking advice well ahead of time as to what to do about that is important.

What Myra and I have just described now, of course, is the UK domestic law position. And it’s very important to appreciate that moving to the UK doesn’t necessarily mean that you cease to be liable to tax elsewhere, depending on the rules of the jurisdiction you’re coming from. And a lot of the work we do is involved in kind of marrying up the tax situation in the UK and the tax situation in the country of origin and making sure that where possible, that’s as tax efficient as possible as it can be. So double tax treaties often play a key role there. The UK has double tax treaties for Income Tax and Capital Gains Tax with most jurisdictions around the world. It has a much more limited set of Inheritance Tax treaties. There only 10 of those, but where they apply, they can have a very significant impact. And so a core part of the work we do is helping guide clients through that and make sure that where possible, they’re only paying tax in one jurisdiction and that their affairs are set up to make that streamlined where it can be.

Guy Broadfield (11:09)

Thanks very much for that, both. In terms of where we are, let’s say, as an individual, you’ve worked out you’ve got the legal right or entitlement to come and live in the UK. And that, broadly speaking, you’re happy with what being UK tax resident might mean for you. Now, clearly, there are a lot of other practical considerations before you actually move. So, Myra, what would be the other things to think about top of your list?

Myra Leung (11:33)

Thank you, Guy. I think the practical considerations which I’ll touch on actually tie in really well with UK immigration and tax considerations as well. For example, where you’re going to live, so you need to have accommodation. For example, you might be renting or buying that could have an impact on your UK tax position. And for some visa routes in the UK, that’s actually a requirement for you to have accommodation in the UK before you move here. The other one being bank accounts, for example.

If you have young children, you also have to think about schooling, you know, where they’re going to attend school. And one thing to note is that if you are a visitor in the UK, you cannot ⁓ study long-term as a visitor. So it’s something to think about before you move to the UK rather than, you know, after you actually arrived.

Edward Hayes (12:18)

I think in addition to those kind of, those are very practical considerations that are going to be key for lots of people’s lives. Even if you’ve, if you’re kind of relatively comfortable with in principle how you’ll be taxed in the UK, taking advice before you come to work out the precise kind of mechanics there is important. Not at least because you may well need and want to make changes to your current setup before you move. So, a classic example is if you are maybe a trustee of a trust, moving to the UK could bring that trust into the UK tax net, you might want to change that before you make the move. Similar for companies, it’s very easy if you have connections with companies for a move into the UK to either bring that company wholly within the UK tax net or create perhaps a permanent establishment for it in a way that wouldn’t be advantageous. So taking advice as to how to restructure those things beforehand is very important. And on the investment side, you’ll have an investment portfolio probably that hasn’t been set up with UK taxation in mind.
We have a number of anti-avoidance regimes for certain kinds of investments, which can have a surprising impact for people who’ve got investment structures which weren’t kind of UK facing. A really obvious example of that is life insurance policy wrappers for investments. So, in the UK, we have something called a personal portfolio bond regime. And if you fall foul of that, as lots of life insurance wrappers do that weren’t designed with the UK in mind, you can face a very penal regime here. So, taking steps to adjust those kind of products before you move is quite key. And actually, for those who’ve been UK resident in the past at all, even if you’ve had 10 years out of the UK before moving, understanding that, you know, checking whether you qualify for the new regime and checking the impact of various other anti-avoidance regimes to you is important. So that kind of detailed tax advice ahead of a move is key.

Guy Broadfield (14:03)

Thanks again both. I think it would also be worth saying that clearly those are the considerations for individuals, but to the extent that individuals are coming with their families, then you should also work out the position for their respective spouses, partners, children, so that each member of the family understands their own position and the considerations, some tax focused, some more practical, and indeed how that might impact the family as a whole or indeed the family structures that Ed referred to.

But all being well, let’s say that our imaginary individual or family have come over to the UK and set up and safely got everything in place that they need to become UK tax resident. Myra and Ed, what would you consider to be the main practical points for them to consider from that point on?

Myra Leung (14:53)

I guess from my perspective, it’s important to think about day counting going forward. So, some people only do day counting just before they move to the UK and they stop. Actually, it’s really important for tax, but also for immigration to keep a record of their ins and outs from the UK because for people moving here, typically they might consider getting permanent residence in, let’s say, five years’ time in citizenship in six years’ time. It’s better to do contemporaneous record keeping rather than having to think about it retrospectively in the future. So that’s my one key takeaway.

Edward Hayes (15:26)

That’s a very good one. I think another point for people is to make sure they update their estate planning. So, you know, they’re very likely have some kind of will in place from a different jurisdiction. That will often have been done without the UK in mind. Obviously, if they’ve materially increased their exposure to the UK, then updating that is really important and updating it in a way that still works with any other international connections they have is very important there.
I suppose also making sure that their ongoing connection to Guy’s point about you moving to the UK has an impact on you personally, but also on others. So making sure that ongoing interactions with other family members or indeed family structures are kind of appropriate and don’t cause any more tax issues than they absolutely have to. It’s generally well known, but if you have a distribution from a trust to a UK resident, that will often trigger tax in some form. And just factoring that kind of thing into planning is key for people.

And indeed, tax reporting itself, making sure that once you’ve moved to the UK you are set up on our tax reporting system, you’ll be compliant with the various regimes we have here and any structures you have will be compliant in the same way. You’ll suddenly find that you might have CRS reporting obligations for example and those will crop up, so taking advice on the tax reporting and compliance side I think is very important.
But on a positive note we are seeing interest in people on the new regime and I think there is a lot to offer for people in the right kind of space and in the right context and the right position in their life, the UK can be a very attractive option and done well, I think you can really take advantage of some quite attractive rules.

Guy Broadfield (17:08)

Thanks again for listening to this episode of Death & Taxes and everything in between, the Private Wealth podcast from Burges Salmon. You can listen to our previous episodes and get in touch with the team at Burges-Salmon.com or on our LinkedIn page. Keep an eye out for new episodes coming later in 2025, focusing on individuals, landowners, business owners, and trustees. Our specialist team will bring you our views on the new rules and their practical implications for clients.

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