It’s no secret that many European countries are in dire financial straits. While the United Kingdom is in better financial health than say, Cyprus, public finances have approached crisis mode. The U.K.’s budget deficit for 2013-2014 will approach 8% of GDP, more than double the figure considered sustainable even by Keynesian economists. The country is therefore ready to woo high net worth immigrants.
To complicate matters further, the U.K. has suffered from a “brain drain” in recent years, due to tax hikes on high-earners. Many bankers and hedge fund managers formerly living in London have taken up residence in Switzerland, Singapore, and Hong Kong, all countries with significantly lower taxes on high-earners than the U.K.
In response, U.K. immigration authorities have streamlined the rules to favor investors, postgraduates, and highly-skilled workers under a priority ”Tier 1” category in an effort to boost migration to the U.K. and by extension the U.K. economy. The U.K. is pitching for the brightest and best, and the richest, and there are surprising shortcuts to permanent residence for those able to invest sufficient funds. Under Tier 1, a points-based system that includes “graduate entrepreneur” and “exceptional talent” categories, there is also an “Investor” visa for “high- value migrants” which leads to permanent residence.
If you qualify, for the first seven years in which you’re resident in the U.K., you may elect taxation as a “non-domiciled resident.” This means that you pay U.K. tax on your non-U.K. income and gains only on what the Inland Revenue calls a “remittance” basis. In other words, you’ll pay tax on your foreign income and gains only to the extent to which you remit them over to, or receive them in, the U.K. After seven years of U.K. residence, you can still benefit from this system of taxation, but the rules make it much more expensive to do so.
For instance, under Tier 1, if you have £1,000.000 of your own money, or £2,000.000 in personal assets plus a loan of £1,000.000 from an authorised financial institution, and you invest the £1,000.000 in a regulated U.K. financial institution within three months of your arrival in the U.K., you can apply for permanent residence after five years of continuous residence. (This means no more than 180 days spent each year outside the U.K.)
There are significant “continuous residence” discounts under the Tier 1 (Investor) category if you have larger sums available to invest. If you’re prepared to invest £5,000.000, you can apply for permanent residence after only three years, and with £10,000.000, you’re eligible after only two years.
The funds invested must remain under your control in a U.K. financial institution during the qualifying period, but you can redeploy them thereafter—thereby theoretically providing a free pass to U.K. permanent residence status. Dependent family members also qualify for permanent residence. After five years of permanent residence, you and your family may apply for U.K. citizenship and passports.
A U.K. passport provides unparalleled freedom of movement for anyone seeking visa-free travel to European and Commonwealth countries, among many others. Any individual or company interested in a review of immigration or investment possibilities in the U.K. is welcome to contact our London office. Jonathan Chalmers, who heads up this office, is a former U.K. immigration official and is closely linked to the U.K. Visas network.
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