Advice/info on moving to minimize tax, IoM?
Discussion
I've just finished reading through the 'Top 1% of earners now paying (almost) 30% of all income tax' thread over on NP&E and it's got me thinking....
In spring '15 my gf and I are looking at moving to France for 6 months with a view to possibly splitting our time 50-50ish between there and the UK should it be successful (we'd probably rent long term out there rather than buy). We're both in luck as there are currently many working from home options for us so that's not an issue, although I'd need to be within a couple of hours of London on a plane.
But, is there potentially a way to throw being resident on the Isle of Man in the mix to minimize tax we pay? At an initial estimate just on savings on income tax alone we're looking at about a 20% increase in combined net income, which would probably increase a bit more when you take in to account the fact that we'd be getting other income from rental properties which I think would be taxed at a rate lower than that of the UK. And let's not even talk about the derestricted roads and having the Isle of Man TT to watch....
The setup might be:
Own 1 property on IoM, live there minimum of 90 days/year, be resident there
Own 1 property in UK (London), visit a max of 90 days/year
Rent 1 property in France, live there for the balance of the year 180+ days
Is this feasible in a legal sense? My questions are:
1) My understanding of IoM residency requires that you spend more than 90 days/year there over 4 years or show some intent to keep a real home there i.e. buy a place and have it for your personal use (it's not exactly clear to me: http://www.gov.im/media/97083/pn14407taxresidencei... this correct?
2) if you become resident in the IoM, does it automatically mean you are no longer a UK resident and subject to UK income taxes, or do you have to register your 'unresidency' in the UK?
3) are there instances, rental income for example, where if the rented property was in the UK, we'd still end up paying UK tax on the rental income in addition to IoM taxes?
4) my understanding is that is we spent more than 90 days/year in the UK, we'd still be liable for UK income tax, is this correct?
Any info much appreciated
In spring '15 my gf and I are looking at moving to France for 6 months with a view to possibly splitting our time 50-50ish between there and the UK should it be successful (we'd probably rent long term out there rather than buy). We're both in luck as there are currently many working from home options for us so that's not an issue, although I'd need to be within a couple of hours of London on a plane.
But, is there potentially a way to throw being resident on the Isle of Man in the mix to minimize tax we pay? At an initial estimate just on savings on income tax alone we're looking at about a 20% increase in combined net income, which would probably increase a bit more when you take in to account the fact that we'd be getting other income from rental properties which I think would be taxed at a rate lower than that of the UK. And let's not even talk about the derestricted roads and having the Isle of Man TT to watch....
The setup might be:
Own 1 property on IoM, live there minimum of 90 days/year, be resident there
Own 1 property in UK (London), visit a max of 90 days/year
Rent 1 property in France, live there for the balance of the year 180+ days
Is this feasible in a legal sense? My questions are:
1) My understanding of IoM residency requires that you spend more than 90 days/year there over 4 years or show some intent to keep a real home there i.e. buy a place and have it for your personal use (it's not exactly clear to me: http://www.gov.im/media/97083/pn14407taxresidencei... this correct?
2) if you become resident in the IoM, does it automatically mean you are no longer a UK resident and subject to UK income taxes, or do you have to register your 'unresidency' in the UK?
3) are there instances, rental income for example, where if the rented property was in the UK, we'd still end up paying UK tax on the rental income in addition to IoM taxes?
4) my understanding is that is we spent more than 90 days/year in the UK, we'd still be liable for UK income tax, is this correct?
Any info much appreciated
Don't let tax rule major decisions in your life - unless you are a multi-millionaire of course and you can afford the cost of complicated and expensive tax avoidance schemes.
Spending more than 90 days in the UK is enough to make you a UK tax resident.
Maintaining UK property is enough to keep you UK tax resident.
As I said, it's complicated.
Spending more than 90 days in the UK is enough to make you a UK tax resident.
Maintaining UK property is enough to keep you UK tax resident.
As I said, it's complicated.
Mario149 said:
Just to clarify, what exactly would make it so expensive to instigate all of this? I mean, to simplify the case, if one were to just sell up in the UK, up sticks to the Isle of Man, buy a place there and just live and wfh there, I'm not seeing the cost?
Moving to tax efficient nations is not always as easy as we would hope, especially within the UK. There are other options, further afield, the Caribbean for example is very simple with citizenship by investment and other programmes in europe will allow for residency and potentially more favourable tax climates.
Chris
The expense comes from the advice you are given in the first instance to set up the scheme you have mentioned and then maintaining this.
If you are looking at being in all 3 countries there are so many different regulations on domiciled/non domiciled and the whole area is very grey in itself.
This is why you should always seek prof advice.
Sounds like a lovely idea though, would love to live in France!!
ps, if you are deadly serious about seeking some advice, the firm I work for specialise in this area of tax so drop me a pm.
If you are looking at being in all 3 countries there are so many different regulations on domiciled/non domiciled and the whole area is very grey in itself.
This is why you should always seek prof advice.
Sounds like a lovely idea though, would love to live in France!!
ps, if you are deadly serious about seeking some advice, the firm I work for specialise in this area of tax so drop me a pm.
The UK residency tests were enacted into law from April 2012 - there are a number of tests to go through but the old "90 day rule" and your resident is history.
Whilst I have advised several emigrating clients, none have gone to gain residency in a "tax advantaged" country and they have all obtained local advice as well.
Incidentally, NZ have a 4 year tax-free window on worldwide income to immigrants, so lots of UK dividends being paid as they are effectively tax free here as well for a non-resident!
So speak to a specialist firm who may know all the rules in all the countries or gain advice in each individual one - in all honesty, whilst more expensive the former is probably best in my opinion.
David
Whilst I have advised several emigrating clients, none have gone to gain residency in a "tax advantaged" country and they have all obtained local advice as well.
Incidentally, NZ have a 4 year tax-free window on worldwide income to immigrants, so lots of UK dividends being paid as they are effectively tax free here as well for a non-resident!
So speak to a specialist firm who may know all the rules in all the countries or gain advice in each individual one - in all honesty, whilst more expensive the former is probably best in my opinion.
David
Eric Mc said:
You can't just do that.
The Isle of Man has restrictions on who can live there. The same goes for the Channel Islands.
You CAN do this. There is no restriction on immigration so long as you are in the UK/EU legally. There is an onerous work permit scheme that you need to go through if you are employed in the IOM. Anyone can buy a house, even if not resident, but house prices are quite high. Travel to/from IoM is a pain and subject to frequent interruption from the weather. Being separated from friends and family not to be underestimated. The Isle of Man has restrictions on who can live there. The same goes for the Channel Islands.
Actually its very easy to 'move' to a lower tax country, you just need an income there, ether earned or unearned, the big problem is loosing the residency in the uk, I had to file 5 succesive nil returns before I had a letter saying I no longer need to file, I've read and understand the new uk resident rules and avoid getting back in, but if you have uk source income then you will pay uk tax on it regardless of where you live, (as a general rule).you need to remover that you pay tax where income is earned, where you are resident generally in that order.
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