Doing Business in the UK: a Guide for Hong Kong Nationals (Carpenter Box)
Business OpportunitiesNovember 26, 2021 - Carpenter Box
This is a thought leadership article from PrimeGlobal member firm Carpenter Box in the United Kingdom. The article provides guidance for Hong Kong nationals looking to do business in the UK.
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Carpenter Box are seeing an increasing number of Hong Kong nationals moving to the UK under the British National (Overseas) visa which supports individuals and their families to come to the UK from Hong Kong. As of May 2021, there had been over 34,000 visa applications.
The UK tax system of self-assessment and the complex rules for non-domiciled persons are quite different to the Hong Kong system where capital gains, dividends, and foreign income are all taxable at 0%. These differences often mean that tax is an important consideration when undertaking such a big move.
For those arriving to the UK, they will need to consider their tax residency and the application of the split year rules long before they land in Great Britain. It is possible that an individual who arrives in the UK in September may be treated as UK resident from the April before.
Therefore, it is important to consider any dividends or gains that the person will be using to fund their lifestyle in the UK that are paid before they leave Hong Kong. If the payments are made when the individual is Hong Kong resident only, then they would not be subject to tax in Hong Kong, however those same dividends could be taxable at the additional rate of 38.1% in the UK as a worst-case scenario.
Determining residency status is complex. Once you’ve established that you are UK tax resident, then you must look to apply the split year cases and review your number of days, occasions, and workdays in the UK to confirm your residency position. The legislation can be complicated, however following the introduction of the Statutory Residence Test in 2013, there is no ambiguity. Individuals could find themselves with an extensive UK tax bill in their year of arrival if they are UK resident earlier than they thought.
Carpenter Box advise working to start these conversations with clients early in their relocation planning, so you can help mitigate their exposure to significant tax charges in the UK.
Once the residency position has been established, an arriving individual can turn their attention to their domicile status, and the more favourable basis of taxation available to non-domiciled individuals. Depending on the individual’s total income in the UK and Worldwide, the Remittance Basis can be very tax efficient, however the cost of use may not be suitable for everyone.
Many of the individuals Carpenter Box have spoken to are not only bringing their families to the UK, but their businesses. This can create additional reporting requirements and compliance burdens for Hong Kong companies, as it is possible for corporate entities to be a resident in both the UK and Hong Kong.
Moreover, for the larger corporate groups, attention must be given to Transfer Pricing and Profit Fragmentation legislation. A transaction undertaken freely in Hong Kong may be subject to additional charges, and penalties if not reported correctly in the UK.
On September 28 2021, Carpenter Box were pleased to present to clients and contacts of fellow PrimeGlobal member firm , Cheng & Cheng Taxation Service Limited, from Hong Kong, on doing business in the UK.
In the webinar, Carpenter Box Partners, Tony Summers, Anthony Davies and Dan Hobbs, discussed:
- Benefits of doing business in the UK
- Options for business structures and their benefits
- Corporate tax considerations and tax reliefs available
- Post Brexit considerations
Carpenter Box are excited to share this knowledge and collaborate with other member firms looking to do business in the UK.
Carpenter Box is an award-winning sector focused firm of Chartered Accountants, Tax and Business Advisers based in South East England, with a headcount of nearly 200. To best serve clients, the firm is organised into specialist business groups, offering a comprehensive range of services to businesses and private clients. By building strong relationships, the firm's specialist teams advise clients on growing their business in a profitable, sustainable and tax efficient way. At Carpenter Box, the team want to understand what clients want to achieve and work closely with clients to help them get there. They offer practical solutions which are right for businesses, business owners and individuals and the wider family. With a relationship led service, the firm looks to build trust to understand the opportunities and challenges faced by businesses.Learn more