High Earners and the Move Abroad

The Shifting Tax Landscape in the UK: High Earners and the Move Abroad

Introduction

In recent years, the UK has seen a significant shift in its tax landscape. There are now 2.8 million more higher rate taxpayers compared to 2010. This change has concentrated the tax burden on a smaller population segment, with over 60% of the income tax being paid by the top 10% of earners. As a result, many high earners are exploring options to mitigate their tax liabilities, including the possibility of relocating abroad.

The Appeal of Moving Abroad: Popular destinations of choice

Faced with increasing tax pressures and high tax rates, numerous UK residents are considering moving to countries with more favourable tax regimes. Thailand and Portugal have emerged as popular destinations for those seeking a better quality of life and potential tax advantages.

Thailand offers a low cost of living, beautiful landscapes, and a relatively lenient tax system. The country’s non-resident status and foreign income exemption rules make it an attractive option for retirees and remote workers.

Portugal, through its Non-Habitual Resident (NHR) regime, provides significant tax incentives for new residents. Its favourable climate, safety, and high standard of living further enhance its appeal.

Navigating Tax Implications with ETC Tax

However, moving abroad comes with complex tax implications that need careful consideration. One crucial aspect is assessing residence status, as individuals may face split-year treatment. This would mean that the tax year is split into a period of residence and non-resident, hugely impacting how an individual’s income is taxed.

ETC Tax can assist clients in navigating these challenges by:

Determining UK Tax Residence Status:

We can assist with reviewing HMRC’s Statutory Residence Test to establish whether you are considered a UK resident or non-resident for tax purposes. This can help you be confident that you are paying the correct amount of tax for the year where there are complex residence considerations.

Split-Year Treatment:

Advising on the rules and implications of split-year treatment, ensuring that your income is correctly taxed during the tax year in question.

Tax Planning:

Providing tailored advice on how to structure your affairs to take full advantage of tax benefits in your new country of residence.

Compliance and Reporting:

Ensuring that all tax obligations are met in the UK and assisting with these. We’re happy to help with all or just part of the process. We are flexible in terms of our level of support.

Next Steps

Relocating abroad can offer significant tax benefits, but it requires expert guidance to navigate the complexities of international tax law. ETC Tax is here to help you every step of the way, ensuring a smooth transition and optimal tax outcomes. Please do get in touch with us at enquiries@etctax.co.uk should you want to find out more.