Leaving the UK? A Guide to relocating to Guernsey

Are you considering a change of scenery, lifestyle and the added benefit of a favourable tax regime?  Are you living in the UK and looking for a charming island life with potential tax benefits? Guernsey, a self-governing Crown Dependency situated 35 miles West of Normandy, France, might be your answer. But before packing your bags, there are crucial steps to understand about losing UK residency and gaining residency in Guernsey.

1. Untying Yourself from the UK

2. Building your Guernsey nest

3. Benefits

Part 1: Untying Yourself from the UK

The UK employs a statutory residence test to determine your tax residency. Simply leaving isn't enough. It would help if you weakened your residential ties in the UK demonstrably. Here's a breakdown of critical areas to focus on:

• Time Spent in the UK: Aim for a minimal time within the UK. The magic number often cited is less than 183 days per year. However, exceeding this limit doesn't automatically make you a resident. The UK tax authorities consider various factors, including the purpose and frequency of your visits. Maintain meticulous travel records (flight tickets, boarding passes, passport stamps) to substantiate your reduced presence.
  
  

• Diminishing Financial Ties: Sever financial ties with the UK wherever possible.

  • Bank Accounts: Close UK bank accounts and investment accounts. Consider transferring investments to institutions outside the UK.

  • • Income Source: Shift your primary source of income to a non-UK source. This could be foreign employment, rental income from a property abroad, or a pension outside the UK.

    • Property: Selling your UK property strongly indicates a severed residential tie. If you retain it, ensure it's rented out, and the income isn't remitted to the UK.
      
      
• Social ties: If your family remains in the UK, consider their residency status and potential impact on yours.

Part 2: Building Your Guernsey Connection

Guernsey offers two primary paths to residency:

• Open Market Residency (OMR): This simplified option caters to British/Irish passport holders or those with existing UK residency rights. You can purchase or rent an "Open Market" property (designated for residents) and apply for an Open Market Resident Certificate. The Guernsey Population Management Office handles this process.
  
  

• Employment & Investment Routes: For non-EU/EFTA citizens, these routes involve the Guernsey Border Agency and stricter requirements:

  • Employment Route: Secure a job with a sponsored permit from a licensed employer in Guernsey. This demonstrates your economic contribution to the island.

  • Investment Route: Invest a significant sum (the exact amount is subject to change) in a Guernsey business or property. This route caters to high-net-worth individuals.

What are the Benefits?

• Reduced Income Tax: Compared to the UK's income tax structure, which can reach up to 45%, Guernsey boasts a flat rate of 20%. This translates to substantial savings, especially for high earners.
  
  
• Absence of Certain Taxes: Guernsey residents enjoy a complete lack of several taxes ordinary in the UK:
  
  
• Capital Gains Tax: No tax levied on profits from the sale of assets like stocks, shares, or property (with some exceptions for purchases of Guernsey property).
• Inheritance Tax: There's no inheritance tax on assets passed down to heirs, offering peace of mind for estate planning.
• Value Added Tax (VAT): Unlike the UK's VAT system, which adds a consumption tax to the price of goods and services, Guernsey operates VAT-free.  This can simplify business from Guernsey.
  
  

• Favourable Corporate Tax Environment: Businesses operating in Guernsey benefit from a 0% corporate tax rate, making it an attractive location for entrepreneurs and international companies looking to establish a tax-efficient base.
  
  
• Tax Implications for High-Net-Worth Individuals (HNWIs):

• Non-domiciled Status: Individuals not considered "domiciled" in Guernsey for tax purposes might only pay tax on income arising within Guernsey. This offers significant advantages for HNWIs with international earnings.

• • Tax Planning Opportunities: Guernsey's tax regime and the expertise of qualified tax advisors on the island can provide HNWIs with various tax planning opportunities to further optimize their tax situation.

Do you dream of island life with potential tax advantages? Are you unsure about the intricacies of losing UK residency and establishing residency in Guernsey? Contact us now and book a free consultation.