Take me home... or know when to run - Part 2

In part one, I discussed the increasing international movement of wealthy people, and how political changes affecting the tax landscape on family wealth are prompting many to consider their options.

A similar dilemma faces those who don’t live in the UK, have never lived there, or have been away for more than 10 years. The FIG regime is potentially opening multiple doors of opportunity for people looking at destinations of choice, which the UK would previously not have featured in.

If you are a British person by origin who has been non-UK tax resident for more than 10 years, you are not currently excluded from benefitting from the FIG regime based on current proposals. The appeal of 4 years of not counting days and spending unlimited time in the UK with your family – whilst protecting yourself from any UK tax on your overseas income and gains – is one that calls to many. Whether these provisions remain open to those with a domicile of origin in the UK remains to be seen.

Similarly, prima facie, you are going to be in a position where you can – for arguably the first time – have actual certainty about your IHT exposure. The opportunity this may present for wealth transfer, asset protection structuring, and perhaps most importantly peace of mind, will no doubt be valued by many.

Alternatively, you might not be British or have ever been to the UK, but you are due to receive a substantial sum from a capital event or overseas pension encashment. Where historically the UK may have been low on your list of potential new locations, the FIG regime could now be very appealing – subject to where “home” is.

The common issue here is that we can’t be sure where the rules will ultimately land. We don’t yet know how certain aspects may apply to our specific case study, what the new government may keep or change and for how long, whether we will like it in a new home, and whether we should stick or twist.

This isn’t just a UK phenomenon. We have seen multiple enquiries from South Africans seeking to protect what they have and seek pastures new. Many Canadians are looking at the Bahamas and the Cayman Islands as potential places to put down roots. The evolution of Brazil’s tax code is a notable example leading to structuring and relocation enquiries. And of course, the divisive nature of the U.S. political situation with their upcoming election is seeing a lot of enquiries into contingency planning.

In none of these scenarios is it possible to know exactly how things will pan out, or what the right move will be. My advice to private clients is to assess what they value and seek the solution that most appeals to their highest value choices. With our islands being jurisdictions in the market for potential relocators, we need to think about how we appeal to those driving forces and influence what we can influence.

For anyone seeking to leave the UK, you can expect to find an improvement in your tax position with the various regimes on offer – be that within most jurisdictions in the offshore islands or even in Italy, the UAE, Monaco, or Portugal. But how important that factor is to you and your family is for you to decide.

For the Channel Islands – cultural fit, safety, political stability, and proximity to the UK, combined with ease of access, appeals to many. Whereas the Bahamian weather, easy access to Miami, marine life and world class golfing may play just as strong a draw to another family with differing priorities.  

There isn’t a right or wrong answer. Whilst many of our jurisdictions offer certainty from a tax perspective, we cannot guarantee you are going to love it as much we do. There is an element of the unknown in every choice.

So, what should you do now? Plan, discuss, engage with your advisers, seek to evaluate what matters to you and where that fits best, and then decide if and when you want to execute.

A key aspect of our global Family Office and Private Client offering at KPMG is that we can provide you with the information you need to assess your options anywhere in the world, and help you make an informed decision, but we cannot make it for you.

Ultimately, any decision will be down to you, but as put so perfectly by the immortal Kenny Rogers: “You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run”.

For more information please email paulbeale@kpmg.com.