Taxing times loom for UK's BNO holders

The number of BNO visa applications has stabilized to around 11,000 a quarter from a quarterly high of over 30,000 cases at the beginning of the visa program.

So how likely will the latest budget statement by UK Chancellor Jeremy Hunt affect Hongkongers who have moved there or those who plan to make the move before the BNO visa program is due to be officially reviewed in the second half of 2025?

As of mid last year, just under 200,000 applications had been received. It is likely that the Home Office will be fairly close to the lower end of its estimates that between 258,000 to 322,400 Hongkongers would move to the UK in the first five years of the program.

In what is also believed to be Hunt's last budget statement before a general election that Prime Minister Rishi Sunak is expected to announce either in May or October, Hunt has proposed to abolish a long-standing taxation regime allowing "non-doms'"- those residing in the UK but claiming to be non-UK domiciled due to, for example, strong family links with another country - to avoid paying UK tax for income and capital gains made outside the UK.

As such, a number of BNO visa holders who have moved to the UK may claim such a status to avoid paying UK tax for income and financial gains made in Hong Kong if they had the expertise to overcome the complexity of the taxation regime involving such claims.

It is sometimes said the "non-dom" tax regime is meant to keep the wealthy in the country.

Sunak's wife Akshata Murty was one such example. She was discovered to have claimed "non-dom" status so that she was not required to pay tax on millions of pounds of dividends accrued to her stakes in her maiden family's business empire back in India.

Hunt has outlined a major reform to the system.

For a majority of BNO visa holders, their most valuable assets are properties yet to be sold in the SAR, as well as stocks.

If they do not claim "non-dom" status in their tax returns, they will also be liable to be taxed on the gains made after selling the properties or from stocks.

These are set to change in April 2025 when the current remittance basis of taxation will be abolished and replaced by a new "four-year regime" so that new immigrants, including BNO visa holders, will not pay tax for foreign income and capital gains in the first four years after setting foot in the UK and will be able to remit these monies into the UK without being charged.

In contrast to the old regime, the changes would make it more convenient for Hongkongers to sell, for example, their flats in Hong Kong in the first four years and remit the money to the UK without the fear of being taxed.

In other words, they have four years to handle their major assets.

Another budget provision directly affecting BNO visa holders is a reduction in the National Insurance contribution, which means Hongkongers who have found a job can take home a little more of pay from their work.

Although the decision of whether or not to move to the UK is up to individuals who have to consider a number of factors including finance, the outcome of an inevitable general election could also be an uncertain factor for the visa program.