Autumn Budget 2024: UK Emigration Options

The United Kingdom’s new government will deliver its first budget on 30 October 2024. Among the anticipated changes is the abolition of the “non-domicile” regime, to be replaced by a residence-based tax system starting 6 April 2025. The current regime allows foreign nationals who live in the UK but whose permanent home is overseas (non-domicile) to pay no income tax on income and gains they make outside the UK. This shift could prompt many high-net-worth individuals and other foreign nationals to explore alternative residence options abroad. An overview of the new test is set out below, but there has been recent speculation that the proposed new regime may need to be watered down over concerns that it will not raise any tax revenue if enough wealthy non-domiciled residents leave the UK. 

New Tax Residence-Based Test

Under the proposed new tax residence-based test, individuals will be subject to UK tax on foreign income and gains once they have been a UK resident for more than four years, regardless of their domicile status.  This four-year period begins either from 6 April 2025, or the first tax year in which the individual becomes UK-resident, whichever comes later. This new regime applies only to those who have been non-UK residents for at least the past 10 years.

Additionally, the government plans to rebase Capital Gains Tax (CGT) on non-UK assets and adjust Inheritance Tax (IHT) provisions. These changes will bring individuals into the IHT scope for worldwide assets after 10 years of UK residence and maintain this scope for 10 years following their departure.

These updates, along with other recent proposals like the introduction of Value Added Tax (VAT) on private school fees, signal a significant shift in the UK’s tax framework. Full details of the changes are forthcoming in the Autumn 2024 Budget.

What is the emigration impact of the anticipated changes?

The changes to UK’s taxation landscape may result in individuals taking a closer look at their residence options in the UK. Both high-net worth individuals as well as those without large investment portfolios or capital are increasingly aware of the upcoming changes. Many countries have gradually captured attention with their more favourable tax systems. As the UK tax landscape evolves, foreign nationals as well as British citizens are now exploring these enticing alternatives more than ever.

Exploring Global Residency Pathways

As the UK’s tax landscape evolves, many individuals are exploring visa options that support flexible living arrangements or long-term relocation to countries with more favourable tax systems. Here are some popular visa types:

• • Digital Nomad and Remote Working Visas:
    • • These visas allow individuals to work remotely for a limited time while employed outside the host country or self-employed. Applicants must typically meet minimum income requirements and provide proof of financial stability. Examples include Spain’s International Teleworking Visa and the UAE’s Remote Working Scheme, offering stays from one year with renewal options. These visas do not allow individuals to settle permanently in the host country or access the local Labour market.
    • Family Reunification Visas:
      • • Individuals can apply for visas based on family connections, such as spouses, children, or parents. Some countries offer more flexible rules for extended family members. For instance, Germany now allows applications for parents without proving exceptional hardship, and the UAE offers sponsorship for expatriates’ parents under specific conditions.
    • Ancestry-Based Residency and Citizenship:
      • • Many European countries offer citizenship based on ancestry, such as Italy and Ireland. These programs often extend to applicants with grandparents or great-grandparents born in the relevant country, providing pathways to EU citizenship post-Brexit for British citizens.
        • Ancestry-based residency and citizenship is typically an inexpensive option with additional information found in one of our recent podcasts.
    • Passive Income Visas (Retirees):
      • • Designed for those with income from investments or pensions, these visas require applicants to show self-sufficiency and private medical insurance. Popular programs include Spain’s Non-Lucrative Visa, Portugal’s D-7 Visa, and Italy’s Elective Residency Visa, each with specific income requirements.
    • Citizenship and Residency by Investment (Golden Visas)

• • • • • Many European Union (EU) Member States and other countries have citizenship by investment (CBI) or residency by investment schemes (RBI) (also respectively known as ‘golden passports or golden visas’). The following jurisdictions are popular with UK residents and Fragomen’s clients due to their tax regimes:
          • • Portugal: Golden Visa – The investment threshold starts at EUR 500,000. Real estate is no longer a qualifying investment.
            • Spain: Golden Visa – Minimum qualifying investment of EUR 500,00 is required into Spanish government bonds, bank deposits, investment funds and / or the country’s share market.
            • Malta: Malta is the only jurisdiction which offers citizenship through passive investment of EUR 600,000 or EUR 750,000.
            • UAE: The Golden Visa allows several pathways to long-term residence via a substantial investment. The visa is valid for 10 years, subject to local discretion, and residency requirements are minimal. You can assess your circumstances using the Fragomen’s UAE Long Term Residency Self-Assessment tool
            • Antigua & Barbuda: Minimum investments can include a non-refundable donation of at least USD 230,000 to National Development Fund, a non-refundable donation of at least USD 260,000 to University of West Indies for families of six or more, or the purchase of qualifying approved real estate worth at least USD 300,000.

Additional Visa Types:

• • • Work and entrepreneurship for skilled employees and individuals to relocate overseas to work based on sponsored employment or entrepreneurship.

• • • Study and internship for students.

• • • Discretionary routes outside of the standard rules may be available.

As the UK moves towards a residence-based tax system, many high-net-worth individuals and foreign nationals may begin evaluating their residency options in other countries. While it remains uncertain how these changes will influence emigration trends, the availability of diverse visa programs—ranging from digital nomad visas to investment pathways—provides viable alternatives for those considering a move.

Need to Know More?

For question regarding your UK emigration options, please contact Private Client Knowledge Development Manager Zahira Patel at [email protected].

This blog was published on 22 October 2024, and due to the circumstances, there are frequent changes. To keep up to date with all the latest updates on global immigration, please subscribe to our alerts and follow us on LinkedIn, X, Facebook and Instagram.