Number of Chinese HNW expats heading to the UK rockets
The number of Chinese expats looking to utilise the UK’s ‘Investor Visa’ programme has rocketed by 56% over the past year, a wealth advisory firm says.
London-based LJ Partnership says that the number of Chinese HNWIs, and also UHNWI’s, who are applying to live in the UK are doing so because of the attractions of living in the country outweigh issues over Brexit.The visa programme, formally known as a ‘Tier One Investor Visa’, enables someone to remain in the UK for three years and four months along with an option to extend this stay by two years.
According to the LJ Partnership, in the year to December there were 122 visas granted, up from 78 granted in 2016. The visa also offers the opportunity of settling permanently in the UK if the expat invests substantial amounts in the country.
The Chinese expats account for 32% of the UK’s investor visa applications and, according to the wealth advice firm, these investors see the UK as a secure jurisdiction in which to hold their assets.
While the US is the most popular destination for Chinese investors, the government there is looking to tighten its regulations which means the investors are looking to other countries.
Kuwait unveils law for expat remittance tax
Kuwait’s has revealed it is going to tax expat remittances from the country – but the law has been put on hold while the National Assembly considers the potential financial impact the legislation will bring.
The Central Bank says that, on average, more than KD 4 billion (£9.3bn/$13.3bn) is sent overseas every year. The draft law could see $500 million (£349m) being generated for Kuwait.
If the law is approved then Kuwait will be the first in the Gulf region to impose such a tax on expat remittances. Kuwait is also set to follow in the steps of Saudi Arabia and the UAE by imposing VAT from next year.
The new remittance tax could range from 1% to 5% and there are penalties aimed at those who do not use official exchange companies and banks for their remittances.
The 1% rate would be charged for workers earning KD 90 per month (£209/$300) while the 5% would be levied on those earning KD 500+ per month (£1,162/$1,165). Penalties for non-compliance could see expats facing a KD 10,000 fine or five years’ imprisonment.
However, the firms running local exchanges say that the tax could have catastrophic repercussions on Kuwait’s economy. They say a black market will be created as expats look to keep their finances out of the official financial system.
US expat groups work together over tax issues
Several US expat groups have been working together in a bid to gather support to overturn the recently introduced Transition Tax of 15.5% which will affect Americans living overseas who own a stake in a business.
Among those working together are American Citizens Abroad, Democrats Abroad and Republicans Overseas who say that while the new tax was aimed at large multinational organisations, it will have a big impact on the way American expats are taxed.
The group is asking for the Treasury to delay the bill’s implementation and pass the Territorial Taxation for Individuals (TTFI) legislation which will be a better way, they say, of taxing Americans overseas.
The US Treasury has announced it is to extend the new Transition Tax deadline by two months. The payment of the expat’s first instalment of the 15.5% levy was due on 15 April – this deadline has now been extended to 15 June.
Meanwhile, American expats who have launched a legal challenge against the Foreign Account Tax Compliance Act (FATCA) suffered a setback after the US Supreme Court declined to hear the challenge. The expats say that the legislation violates their constitutional rights.
France lures UK talent with tax breaks
It has been revealed that France is working hard to attract foreign expats to move there with improved tax breaks.
France is looking to encourage employers who may be affected by Brexit by offering their employees an exception from paying income taxes in the country for eight years.
The new incentive will be backdated to include workers who started a new role in the country after 6 July 2016. The policy also extends to delivering tax breaks on any bonus that is earned outside France, including intellectual property assets.
Meanwhile, President Macron’s election promise to increase taxes on all second homes in France has seen some areas doubling the charge. For expats and others affected, Nice, Bordeaux and Paris have doubled the tax rate which includes holiday lets which may be a property an expat is planning to live in when they retire.
Expat salaries in GCC set to rise
A survey of employers in the Gulf Cooperation Council (GCC) region has revealed that 10.5% of firms will implement a pay freeze this year, with 21% looking to improve pay by 3.5%.
However, the number of employers looking to boost pay by 5% to 6.5% in 2018 has risen with 17% of employers saying they will do this. The findings from Informa highlight that fewer employers are looking to adjust their healthcare provision package to attract talent.
In addition, the findings highlight that the VAT implementation across the GCC region will see 59% of employers not taking into account the higher cost of living when calculating salaries for this year and 2019.
Just 14% said that the imposition of VAT would influence the level of salary being offered, while 7% of employers said they are undecided how VAT will impact pay.
British expats can buy BTL property in Scotland
British expats wanting to invest in buy to let property in Scotland can now do so with Skipton International extending its offering. Until recently, Skipton only offered British expats buy to let mortgages for property in England and Wales.
However, Scottish property is now outperforming most areas in England with yields of 7% and 8% being enjoyed by landlords.
For landlords in London, yields have fallen from 3.6% to 3% over the last 12 months. The returns rise as investors head north with those in the North West enjoying yields of 5.5%.
Also, the fastest growing house prices for any UK city are currently in Edinburgh with the average value rocketing by 7.7% in the year to January. In London, prices increased by 1.6% over the same period.
Skipton’s director of lending, Nigel Pascoe said: “As an offshore lender, we feel our BTL package will appeal to expats wanting to buy Scottish mainland properties and also those in Wales and England.”
He added that property lending for expats is ‘an under-serviced area’ and there are just a few lenders that will lend to British citizens living overseas on a Scottish property.
British expats in Dubai sue financial adviser
In what could be a landmark legal case, a group of British expats living in Dubai are suing their financial adviser for hundreds of thousands of pounds. They claim that the adviser misled them over investing in high risk assets. They say that they believed they were investing in low risk schemes but their cash was channelled instead to high risk projects including UK student accommodation which led to huge losses.
A national newspaper reports they are seeking civil damages after the adviser was convicted of operating in Dubai this year without having a local licence. The expats are hoping that they can reclaim their losses and that the judgement, if found in their favour, will be enforced in the UK.
Brits overseas will still need financial advice
British expats looking to move their pension overseas will still need advice from a regulated financial advisor in the UK, the government says.
The Department for Work and Pensions had considered watering down the requirement but with expats losing out on £30,000 in safeguarded benefits means the need for advice will remain.
The move follows the government’s introduction of pension freedoms so expats can access and move their pension pot overseas.
Information about the government’s stance on expats needing pension advice and the responses they received are on the Gov.uk website.
Meanwhile, British expats with a pension held with a UK-based pension firm may find that their pension transfer services have been suspended after the Financial Conduct Authority announced a shift in the way it oversees defined benefit transfers.
There at least five pension providers, including Scottish Widows, who are waiting to see whether there will be new rules for pension transfers being imposed. The providers say that applications already in the system will be processed.
Offshore jurisdictions to comply with investigation
Officials from the UK’s Crown Dependencies and overseas territories have confirmed that they will co-operate with a government investigation into tax avoidance and evasion.
However, some of them say they are surprised that an investigation is necessary after several new regulations for the exchanging of information have come into force around the world.
Among these new rules is the Common Reporting Standard which, the officials say, has transformed offshore financial services.
The government has set a deadline of 31 May to investigate the extent of tax avoidance since 2010 and whether HMRC’s efforts to reduce this have been successful.
Wealth advisors need to be proactive
Wealth advisers with high net worth clients will need to take a proactive approach in 2018, says data firm Global Data. They say that last year’s strong stock market performance has led to HNWI’s portfolios being skewed towards equity investments.
Now, however, recent market volatility and growing political unrest, means these investors are unsure which assets they need to balance their portfolios. In their global wealth manager survey, wealth managers say they aren’t expecting much to change over the next year but highlights that HNW investors are looking for fresh ways of diversifying their portfolio and their advisers need to be proactive when offering guidance.
The firm also says that growing numbers of HNWIs in Australia means that advisors ‘need to up their game’ – including helping their clients relocate there.
In other news…
A bill has been put before Kuwait’s Parliament that could see expat residency fees increasing by 50% to 100% for all residency and family visas. MPs will vote on the proposal.
MPs in Bahrain have voted to reject a law that would have seen the imposition of annual fees of BD 400 (£743/$1,064) on non-Bahraini pupils studying in public schools. The lawmakers said that the move would deprive children of an essential right to enjoy education.
The Finance Act 2018 is now law in the UK and it is aimed at closing offshore tax loopholes and tackling VAT fraud. HMRC predicts the new legislation will raise £1.2 billion. Among the changes is a move to prevent high earners using a complicated structure to avoid reporting what they really earn.
An amnesty for Zimbabweans, including expats from the country, to declare their assets has seen its deadline extended to 30 June, the Zimbabwe Revenue Authority has revealed. They want clients to regularise their tax affairs.
A report on South Africa’s high net worth individuals has revealed that they are decreasing investments in property and boosting the amount of money they hold in overseas investments. The report from New World Wealth covers the last 10 years with a distinct trend of moving assets into offshore or overseas investments becoming increasingly popular.
The Pure Gold Company says there has been a 62% increase in the numbers of financial professionals, including accountants, investment bankers and judges, who are investing in physical gold. The metal is seen as a traditional safe haven during times of geopolitical tension and world economic uncertainties. Pure Gold’s chief executive, Josh Saul, said that the financial professionals are investing after suffering falls in equity values and there’s been a 36% increase in first-time investors looking to buy gold.
The chief executive of a remittance provider and currency exchange has told a media outlet that blue collar expat workers in Oman will remit around 95% of their earnings to help their families in their home countries. The announcement comes in a bid to stem discussion of a tax being imposed on remittances from expats in Oman.
The Maldives’ Pension Administration Office has announced a change for expats wanting to access their pension savings. They say that an expat planning to leave the country must apply for access three months before their departure.