The arrival of François Hollande in the Elysee
Palace recently is expected to trigger the departure from
France of a number of French "high net worths" seeking refuge from
the anticipated increase in French tax. London already has a large
and well-established French community and offers an attractive
destination for French nationals looking to relocate.
For those considering a move to the UK, the main issues are
likely to be (a) understanding how their worldwide income and gains
will be treated under UK rules (b) organising employment in the UK
and (c) the purchase and ownership of a UK property.
Worldwide Income and Gains
If an individual is not coming to the UK permanently and may at
some stage return to France, he will be non-UK domiciled (even
though UK resident) and there are certain tax advantages to
For a UK resident, non-UK domiciled person UK source income and
gains will always be taxable in the UK. For foreign income and
gains, however, the remittance basis can be claimed to reduce
exposure to UK tax. Under the remittance basis, foreign income and
gains are only taxed in the UK if they are remitted (i.e. "brought
in") to the UK from abroad.
Those who have been resident in the UK for more than 7 years
will need to pay an annual remittance basis charge of £30,000
(which rises to £50,000 once they have been in the UK for 14
years), if they wish to continue to claim the remittance basis
charge. There is no remittance basis charge for those who have been
in the UK for less than 7 years.
Earnings from a UK employer will be taxed as income at the rates
of 20%, 40% and 50%. The top rate of 50%, which is being reduced to
45% as from 6 April next year, applies to income above
However, where a UK resident, non-UK domiciled person undertakes
duties in the UK and abroad, his overseas earnings can be taxed on
the remittance basis if his overseas duties are distinguishable and
separate from his UK employment and there are two separate
employment contracts in place. Alternatively, if a person is not
"ordinarily resident" in the UK it is possible to keep non-UK
earnings out of the UK tax net, even in the absence of split
contracts and even if the employer is UK based.
Buying a home in the UK
As a result of this year's budget the purchase of a UK
residential property worth over £2million will attract a 7% SDLT
charge. The rates of SDLT for properties below the £2million mark
range from 1 to 5%. If the property is purchased through a
"non-natural person" (such as a company or a partnership with a
corporate partner), the SDLT rate rises to 15%.
A gain made on a sale of property by a UK resident owner will
trigger capital gains tax (CGT) at 18% or 28%, unless the property
is the owner's principal home, in which case the gain is not
chargeable. The UK Government also plans to introduce a new CGT
charge on gains made by non-UK companies on disposals of UK
residential property, thereby bringing non-resident entities within
the UK CGT net for the first time.
In addition, the Government is consulting this summer on a
proposal to introduce (from April next year) an annual "mansion
tax" on residential properties which are held by "non-natural
persons" and are worth over £2million.
If owned personally, the value of the UK property will also be
within the UK inheritance tax (IHT) net, regardless of the owner's
domicile. If an individual dies whilst owning UK property, the
value of the property above a tax-free threshold of £325,000 will
be taxed at 40%. A full exemption from IHT applies where assets
pass from one spouse to another (although this exemption is limited
to £55,000 where assets pass from a UK domiciled spouse to a
- Plan ahead - seek specialist tax advice in advance of any move
to ensure that proper planning is in place before arriving in the
- Consider making an English Will to cover English real estate on
- Consider whether you will claim the remittance basis and plan
accordingly (in terms of organising bank accounts and ring-fencing
- Ensure that any UK tax planning dovetails with the tax regime
in your home country and don't forget the potential application of
double taxation treaties.
This article by Geoffrey Todd and Katie Hawksley first
Money Observer on 19th June 2012.