HK migrants' UK tax shield to be abolished

Hongkongers who have migrated to the United Kingdom will have to pay tax to the British government for their overseas assets from April next year.

The news was delivered by British finance minister Jeremy Hunt, who moved on Wednesday to abolish a long-contentious "non-dom" status that lets wealthy, often foreign residents avoid tax on overseas income.

Non-domiciled status has often been used by billionaires living in London but who do not consider Britain as their permanent home, allowing them to opt to pay UK tax only on income earned in or transferred to Britain.

Under the new arrangement, expected to raise 2.7 billion pounds (HK$27.15 billion) a year for Britain, new arrivals will pay tax on foreign income and gains after four years of UK residency.

A Hong Kong dentist moving to Britain, Lam, welcomed the four-year grace period as it benefits Hongkongers who have just been granted a British National (Overseas) visa and have yet to sell their properties and assets in the SAR.

Lam received his BNO visa and emigrated to Britain at the end of last month and has settled in London with his family.

He said he still owns a flat at Whampoa Garden bought in 2019 as he waited for the administration to scrap measures imposed on the property market. Although the government has recently canceled the measures, Lam said his property's price has already dropped by around HK$2 million.

Lam said he still has four years to handle his Hong Kong assets under the new tax arrangement and he hopes to sell his flat after prices rise.

Goldmax Immigration director Benny Cheung Ka-hei said it was understandable for the UK to impose a tighter taxation policy as other Western countries, including the United States and Australia, have adopted similar measures.

Some Hongkongers emigrating to Britain have voiced concerns about the new arrangement, Cheung said.

"People are very conflicted sometimes as they wish for perfect welfare and low taxation, which is impossible," he said.

But Cheung said most Hong Kong immigrants were prepared for higher taxes overseas and were usually in good financial condition.

He suggested Hongkongers in the UK seek professional advice from accountants. The British Conservative government had previously defended the non-dom status, arguing it wanted to attract the wealthy to live and spend their money.

But critics questioned why the richest should get tax breaks, saying it highlighted unfairness in society.

Announcing his party's U-turn, Hunt said he always believed those with the "broadest shoulders" should pay their fair share as long as any new system protects the UK's attractiveness to international investors.

"I have concluded we can indeed introduce a system which is both fairer and remains competitive with other countries," he told parliament.

He said Britain would raise 2.7 billion pounds a year by changing a policy created in 1799 to shelter those with foreign property.

wallis.wang@singtaonewscorp.com

Editorial: Taxing times loom for UK's BNO holders