If you’re a business owner considering relocating from Hong Kong to the UK, it’s essential to understand the differences in tax systems between the two regions.
The UK’s tax regime is notably complex, particularly following recent changes to the non-domicile (non-dom) rules introduced in the Spring Budget 2024.
In Hong Kong, on the other hand, the tax system is relatively straightforward, focusing primarily on income sourced within the region.
Historically, non-doms in the UK could choose to be taxed on a remittance basis, meaning they were only taxed on UK income and any foreign income they brought into the country.
This option provided significant flexibility for managing tax liabilities.
However, beginning in 2025, this option will no longer be available.
The abolition of the remittance basis charge means that non-doms will now be taxed on their worldwide income and gains, regardless of whether this income is brought into the UK.
Understanding UK tax rates
In the UK, Income Tax rates are progressive and depend on your earnings:
- Basic rate: 20 per cent for annual earnings between £12,571 and £50,270.
- Higher rate: 40 per cent for annual earnings from £50,271 to £150,000.
- Additional rate: 45 per cent for annual earnings above £150,000.
Additionally, Capital Gains Tax (CGT) is another significant consideration. CGT is applied to the profit made from selling an asset that has increased in value. For the 2025-2026 tax year, the rates are:
- 10 per cent for basic rate taxpayers.
- 20 per cent for higher and additional rate taxpayers.
- Higher rates of 18 per cent and 24 per cent apply to gains on residential property.
Given these changes, strategic tax planning for your move to the UK is going to be crucial.
Non-doms must now report all global income and gains on their UK tax returns.
Effective strategies to mitigate tax liabilities include utilising tax-free allowances, timing asset disposals to coincide with years of lower income, and investing in assets that qualify for specific reliefs, such as Business Asset Disposal Relief.
Transitional period for new non-doms
To ease the transition, the UK Government has introduced a four-year grace period for new non-dom residents.
During this period, you will not be required to pay tax on worldwide income, provided it is not remitted to the UK.
This transitional arrangement can be advantageous if you plan to stay in the UK for a short period.
It is advisable to consult with a tax specialist who can provide tailored advice based on your specific circumstances before you decide to move to the UK, however.
Talking to a professional can help ensure compliance with UK tax laws while optimising your tax position.
Our team specialises in both Hong Kong and UK tax laws, offering strategic guidance to support your personal and business goals.
Contact us for more detailed information or personalised tax advice to make your move to the UK as smooth as possible.
Reanda UK is a subsidiary of leading independent accountancy firm Grunberg & Co Limited. Our aim is to help businesses and individuals to navigate the UK’s world-renowned business and tax infrastructure, and to support them with their international ambitions. To find out how we can help you, please contact us.