You might argue that there are plenty of reasons to up sticks and flee the country right now – crumbling public services, higher living costs and steep increases in school fees to name but three.
Labour is already considering ending the 225-year-old non-dom tax concession that allows wealthy people whose main home is overseas to live in the UK and not pay tax on their foreign income.
And capital gains, inheritances and pensions are tipped as prime targets for tax rises in next month’s Budget.
With both high-net-worth individuals and members of the squeezed middle feeling that the UK is becoming a significantly less attractive place to live, they are weighing up the alternatives.
While the most tax-efficient places may include the British Virgin Islands, Jersey and Gibraltar, the cost of living, lifestyle and employment opportunities make other locations more popular.
Dubai is a favourite destination for millionaires leaving the UK – there are estimated to be around 240,000 British citizens living in the UAE where the average salary is £39,262
The top destinations for millionaires leaving the UK this year are projected to be the United Arab Emirates (UAE), the US, Italy, Greece and Portugal, according to the migration consultancy Henley & Partners.
These are the most popular investment migration routes, but not everyone has the funds or the inclination to gain residency or citizenship rights this way.
So can you afford to make the move abroad, and, if so, where else might you look?
Dubai is a favourite, and not just with the uber-wealthy. There are estimated to be around 240,000 British citizens living in the UAE, where the average salary is £39,262.
Its zero-income tax and ten-year automatically renewable Golden Visa programme (which affords you residency and the ability to own property) make it attractive and relatively easy to move to.
High housing prices and expensive groceries are not a deal-breaker for Michael and his wife Sarah. They have done the maths and plan to move to Dubai from their rented property in Suffolk.
He says: ‘We sold up last year when we saw this coming over the horizon. We both work for government departments, so knew what was going to happen. At some point the continuous beating of the middle class has to stop.
‘The policies and tax regime do not advocate for doing better in life. The VAT policy on private schools is the final straw. Yet again, those that make sacrifices to better the chances of their children are being victimised.’
The couple have worked out that their outgoings in Dubai will be £6,480 a month, including rent or a mortgage of £3,700 (for a three-bedroom property), school fees for their two children, utility bills, and car and health insurance. The move itself – removals, flights and visas – will cost between £15,000 and £30,000.
Michael adds: ‘The obvious benefits are that there is no income tax and a rate of 5 per cent for corporation tax. Between us, we pay £6,800 tax a month, adding in another 20 per cent of VAT on private school fees takes this to around £7,200 in tax alone. But non-existent crime rates, good work opportunities, great weather, central location in the world make Dubai an ideal place to live.’
For anyone who spends more than 183 days in each year in the UAE there are no UAE taxes on their assets outside the region, Philippe Amarante, the head of legal consultancy H&P Dubai, says.
He adds that in addition to the investment-based Golden Visas, or other long-term residence options, a very popular route is setting up a company in Dubai: ‘It provides a cost-effective pathway to gain the right to work and the right to reside,’ he says. ‘The cost can be from £1,037 for a two-year residence permit.’
For accessibility, Europe might be the first choice for a move, but Britons without a work visa need a certain level of pension or investment income, or relatively liquid assets (such as bank accounts or stocks and shares) to qualify for the visa in the first place.
Each country has a different minimum level, which needs to be proved each time you renew the residency permit (normally two to three times during the first five years of living abroad).
You will also need to budget for private healthcare in most cases (unless you are a UK state pensioner in Spain, for example).
Portugal remains a popular choice, despite closing some doors to entry or tax breaks such as the real-estate element of the golden visa scheme that offered residency to those that purchased property costing over €500,000 (£416,842).
Its relatively low cost of living is a major pull. A couple should expect to spend between £1,969 and £2,362 a month in Portugal outside the main cities, according to Global Citizen Solutions, a residency consultancy that has helped more 100 UK families move to Portugal since Brexit.
With more people feeling that the UK is becoming a less attractive place to live, the cost of living, lifestyle and employment opportunities make other locations more popular, such as the Charente in France
The average cost of a one-bedroom apartment in Lisbon is £1,036 a month, according to the agent Goldcrest Advisers, around two-thirds the cost of the equivalent in London. You can rent a two-bedroom apartment on the Algarve from £540 to £1,250 a month, depending on season, according to estate agent Ideal Homes International.
What’s more, under-35s are now exempt from stamp duty (IMT) when buying their principal home. The most popular route to residency there is the D7, which works as a retirement or passive-income visa, according to Patricia Casaburi, CEO of Global Citizen Solutions.
‘Since the new UK government announced the end of the non-dom tax regime we’ve had a spike of enquiries from UK citizens looking for a second citizenship to secure their mobility and assets.’ The D7 requires a relatively low income of €9,840 (£8,309) per year for a single person, or €14,760 (£12,464) for a married couple.
Portugal has historically offered tax breaks for new residents, but while its old NHR scheme has now closed, there is a new version called the Tax Incentive for Scientific Research and Innovation, informally known as NHR 2.
Under this tax regime, foreign sources of income – such as dividends, interest and rents – may be exempt (but not pensions) and a flat rate of 20 per cent will apply on employment and self-employment income.
These benefits last for a ten-year period for those residing in Portugal for at least 183 days a year and meeting the criteria.
For those not on this regime, investment income (interest, dividends, rental income, capital gains and ISAs) are taxed at a flat rate of 28 per cent, according to the financial advice firm Blevins Franks.
With lower living costs than the UAE, Cyprus was another consideration for Michael and Sarah, but it offers far fewer international schools and has restrictions on working. The fast-track visa (Category F) is currently suspended, and a visitor’s permit to legally reside there requires proof of funds of at least £8,442.
But if you aren’t in a rush to move there can be tax benefits. You are only liable to local capital gains tax (at 20 per cent) on gains arising on the sale of property in Cyprus – property in the UK or elsewhere is exempt.
Gains made on the sale of shares are generally not taxed in Cyprus, including company shares; Cypriot residents are taxable on worldwide income (at 20-35 per cent), but if you have lived there fewer than 17 years there is no tax on interest and dividends.
There is no inheritance or succession tax in Cyprus, but beware that British expats there – as per other countries – don’t necessarily escape death taxes completely.
‘If you remain UK-domiciled, as many do in spite of living abroad for years, you remain liable for UK inheritance tax,’ says Jason Porter of Blevins Franks, pointing out that UK inheritance tax is assessed on your domicile (long-term home) not where you reside.
These rules are set to change under domicile regulations yet to be finalised by the UK government, but beware – you could be liable for tax in both the UK and your new country.
Also be aware that other countries have different inheritance rules, which may mean you cannot pass your assets to who you wish and you may face higher local estate taxes than in the UK.
Spain is top of many people’s list to move to right now but is a bit of a minefield when it comes to working out whether you’ll be better off financially because it has 17 autonomous regions that impose different tax rules.
Income-tax brackets are generally 19 to 47 per cent, yet when different regional inheritance, wealth taxes and income are considered, Madrid, Andalusia and Murcia are among the most competitive regions – according to the Tax Foundation – as well as being popular British destinations. Valencia and Catalonia are the least tax friendly.
The moderately wealthy are still attracted to Andalusia – home to the ever-popular Costa del Sol – where inheritance tax bands are attractive. There’s an £833,000 allowance and then 99 per cent tax relief for anything above that, and there’s no regional Wealth Tax.
But for those with more than £2.5 million, a new Solidarity Tax for high-net-worth individuals payable across Spain – though supposedly temporary – is a big deterrent, according to advisers.
‘It effectively replaces Wealth Tax so for ultra-high-net-worth individuals it makes Spain expensive, whereas for mere high-net-worths it might still be attractive,’ says Peter Ferrigno, director of tax services at Henley & Partners. ‘That capital gains are taxed at the same level as other investment income also makes it less attractive for relocating millionaires.’
A cost-effective life in the sun can be possible if you know the tax rules – especially for company owners. Quentin, 44, who has moved with his wife Lucy from Aberdeen to the Costa Blanca, says: ‘I own an online business, which means I can work abroad, but fired myself from my own company and now take dividends. I pay 10 per cent tax – the rate is 19 per cent, minus some allowances I get for living with a family in Spain.’
Based on individual circumstances, people can receive ‘allowances’ – or tax credits – for being resident in Spain with dependents. In his case this means he pays 14 per cent, not 19 per cent tax on dividends.
He’s legally there via the Non-Lucrative Visa, the most popular visa with Britons right now, according to relocation agents, which does not permit working but allows passive income – such as taking dividends. The minimum income requirement for this visa is £24,000 per year, plus £500 per family member.
A four-bedroom villa with a pool bought for £338,000, and private school fees of £337 a month for his son and just £126 a month in bills makes it well worth the move to Denia from Scotland.
Three years on, life is good and he has no plans to return home, which is just as well as if he comes back to the UK within five years he may be liable for tax on income and gains received while he was not resident in the UK. ‘You will need to remain non-UK resident for five complete UK tax years to avoid it,’ says Jason Porter.
Another reason to make sure you do your sums first.
La Belle France is still attractive
France is often assumed to be a high-tax country for those working, yet for those living off capital, such as retirees or early retirees, it can be a very low-tax place to live – if you plan carefully before leaving the UK.
Christopher Davenport, of Kentingtons, which offers financial advice to Britons moving to France or living there, says: ‘Property outside France is exempt from property wealth tax for the first five years of residency.
‘To be liable to property wealth tax you would need to have property assets valued over £1.09 million.
He says that social charges of 9.1 per cent may be due. These are payable on taxable income towards social security, healthcare retirement benefits and social welfare.
Vilma Arlauskaite, 42, is in south-west France looking for her dream home and, as an estate agent owner, knows how much further her money will go in rural Gascony
The lure of having the space for a new enterprise with her family is why Vilma Arlauskaite is in south-west France looking for her dream home. As someone who runs her own estate agency in Beckenham, south-east London, where the average property sells for £596,743, she knows how much further her money will go in rural Gascony.
Vilma, 42, who has spent the day viewing properties at around their £167,000 budget, says: ‘The high cost of living here in the UK is a big motivation for us to leave.
‘We want more sunshine, a cheaper property and to live in a place where we can live a healthy and fulfilling life.’
Her favourite is a six-bedroom detached house with 17 acres, a lake and outbuildings that her partner Nigel, a builder, can renovate. Vilma says: ‘Our daughter Teya is nine, so it’s the ideal time. She wants a horse and we want to grow organic produce, have a yoga retreat, run it as a business.’
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