Moving to the UK: The available visas

Guernsey/Isle of Man member Dixcart explains the tax advantages and the different UK visas available to entrepreneurs and high net worth individuals. 

Tax advantages available to UK companies

• One of lowest rates of corporation tax in western world (19% reducing to 17% in 2020)
• No withholding tax on dividends
• Majority of share disposals and dividends received by holding companies exempt from taxation
• Controlled foreign company (CFC) tax rates only apply to a narrow classification of profit.

Tax advantages available to foreign individuals

Foreign individuals who are resident, but not domiciled in the UK, have the opportunity to benefit from electing to be taxed on the remittance basis of taxation. This means that they pay tax on UK source income and gains, but foreign income and gains are only taxed if they are remitted to the UK. This status is available in their first 15 years of residence in the UK.

Who can move to the UK and how is this achieved?

EU nationals have the right to reside in the UK. Non-EU nationals need to obtain a residence visa. There are two types of UK visa which are particularly popular with high net worth individuals and/or entrepreneurs:

The UK Investment Visa

An individual from outside the EU can obtain an initial UK residence visa for three years by bringing £2 million to the UK and investing these funds in permissible investments.

As long as the provisions continue to be satisfied, after the initial three year period the individual will be granted a further two year visa and, following this, can then apply for Indefinite Leave to Remain (ILR) in the UK. The rules allow for accelerated ILR after three years if an individual has invested £5 million and after two years if £10 million has been invested.

The UK Entrepreneur Visa

Individuals from outside the EU can qualify for a UK Entrepreneur Visa if they invest a minimum of £200,000 in a new or existing business in the UK and create new employment. In certain circumstances the initial investment can be reduced to a minimum of £50,000. The visa allows an individual to enter and reside in the UK for up to three years and four months.

When this initial time period expires, an individual can apply for an extension of the Leave to Remain in the UK for a further two years as long as the individual remains engaged in the specific business activity detailed by the visa and the business has created at least two full time jobs for people resident in the UK. After five years, the individual can apply for Indefinite Leave to Remain (ILR) in the UK.

What about dependents?

A spouse and children under the age of 18 can accompany the holder of either type of UK visa as dependents.

Additional criteria and citizenship

In terms of the ILR, the main applicant must not be absent from the UK for more than 180 days in any single year.

Currently, an individual must be resident in the UK for five years, one of which must be post ILR, to be eligible for citizenship (unless his or her spouse is a UK citizen). To meet the citizenship requirements an applicant must not be absent from the UK for more than 450 days in the five year qualifying period, and for not more than 90 days in the final 12 months of that five year period.

Tax

Individuals resident but not domiciled in the UK are eligible to pay tax on a remittance basis. With careful planning (particularly pre-arrival), this can result in a low UK tax burden.

It should be noted that the remittance basis of taxation in the UK is subject to change.

For more information

In the first instance, please contact John Nelson at Dixcart for help with any of the issues covered in this article. The firm provides a wide range of pre-arrival / post-arrival services and family office services.