As part of our US expatriation series we look at the choice to relocate the UK from the US. Here are the pros, cons and important issues to keep an eye on.
In previous blogs and articles, I’ve discussed the motives and strategies behind the phenomena of an unprecedented number of Wealthy American families getting second citizenships and residences. In the blog on gun violence I quoted NYC Professor and Podcaster Scott Galloway. He discusses his recent family move from Florida to London;
I’ve already discussed Canada, and Europe (through lineage citizenship) as possible target citizenship and residence jurisdictions. In this blog, I will take a look at the pros and cons of the United Kingdom.
As with my home country of Canada, I want to disclose that I have also previously lived in the UK. In addition, over the past thirty plus years I’ve advised numerous families on both a move to… and from…the UK.
Issues to consider when assessing the UK
The United Kingdom has always been a popular destination for Wealthy Americans looking to relocate. Whether it’s for retirement, work, education, or simply a change of scenery, the UK offers a culture and history that allows for easy assimilation for Americans. With the upcoming November 2024 US election, the UK is heating up as a potential relocation option. However, there are a few things to consider before making the move.
Taxation in the UK
One of the main reasons the UK is such an attractive destination for Wealthy Americans and other non-Brits is the tax advantages it offers. Specifically the Remittance Tax or “Non-Dom” regime. If one qualifies for such as status, then UK income tax is reduced to only the current year’s income that one “remits” (i.e. takes into one’s hands) to the UK in the same year AND UK source income. If a Non-Dom has sufficient capital to cover UK expenses for a year and does not have any UK source income, then their UK tax bill could well be zero. Of course, if the individual has also properly expatriated from the US, then they will also not be paying any tax to the US!
Currently one can be a Non-Dom for only 15 years. Unfortunately, the Labour opposition has vowed to immediately eliminate the Remittance Tax regime should they form the next government. They have also pledged to change the current trust planning used to avoid UK Inheritance Tax. With an election that must be held no later than January 2025, and Labour currently leading in the polls, relocating Americans need to keep a weather eye on the UK tax regime. As with any election, there is always the possibility that tax laws could change.
Family Law in the UK
Another important factor to take into account when considering a relocation to the US is its status as the divorce capital of the world. Given that over half of marriages end in divorce, this is an important consideration. You should also consider the potential future divorces of children and grandchildren. These may well dissipate the family’s wealth over time. Therefore, expert pre-relocation family law planning, and drawing on tools such as trusts and pre/post-nuptial agreements is critical. Too many people forget that while income tax is a percentage of income… divorce is a percentage of capital. When getting married the common assumption is that it is forever. Unfortunately half of marrying individuals are wrong.
Despite the current state of its family law, the UK is currently looking to reform its divorce regime and bring it into the modern age with new laws surrounding it.
Healthcare in the UK
The UK operates a National Health Service which provides medical coverage for all UK residents. However, most wealthy families who relocate there also get private health care insurance. This gives them immediate access to private hospitals and world class practitioners.
Education in the UK
The UK has long been the preferred destination of wealthy families from around the globe for primary, secondary and post-secondary education. It has elite private schools and some of the oldest universities in the world. Wealthy families are spoilt for choice in finding the boarding or day school options that best fit their needs.
How to move to the UK
Prior to the Brexit vote, EU country nationals enjoyed the right to live, work and study in the UK. Unfortunately, the ability to secure UK status for EU nationals has already ended. However it is worth noting that Irish nationals still enjoy this right under the terms of the Common Travel Area. This provides a distinct advantage to those who qualify for Irish citizenship either through lineage or by naturalisation.
In early 2022, the UK closed its Tier 1 Investor Visa category. This had previously been the preferred path for families to gain residence in the UK. However, there are still various other pathways available to gain residence status. If you’re considering a move to the UK, then it is critical to retain expert up-to-date advice on a strategy that will meet your family’s needs and timing.
Final Thoughts on considering a move to the UK
In conclusion, the UK offers many advantages for Americans looking to relocate, from its favourable tax laws to a lifestyle that can easily meet your family’s personal and business needs and preferences. However, just as a pending US election is a key consideration, the acquisition of a second residence in the UK requires careful planning and a constant monitoring of the political situation.