BNO visas attracting major interest from Hong Kong citizens

The Covid pandemic may have deterred some of the hundreds of thousands of Hongkongers from seeking a route to citizenship in Britain. First-quarter figures for this year suggest that only 34,300 Hong Kong citizens had so far applied to come to the UK under a British National Overseas (BNO) visa, but Sovereign (UK) – as well as our colleagues at Sovereign Trust (HK) – has seen a marked increase in interest since the start of this UK financial year and the Home Office predicts that about 150,000 Hongkongers will arrive in the UK in the first year.

In 2020 the UK Government changed the rights attaching to British National (Overseas) status in Hong Kong and the new BNO visa from 31 January 2021. This enables Hong Kong citizens with BNO status to come to the UK with their close family members for five years. After five years of UK residence, they can apply to settle – termed as ‘Indefinite Leave to Remain’ (ILR) – and, after a further 12 months to apply for British citizenship.

There is no limit on the number of eligible people who can come to the UK under this new Visa. The UK government has estimated that there are around 2.9 million BNO citizens in total, while a further 2.5 million Hong Kong residents may also qualify as family members and dependents.

For those Hongkongers that have already arrived in the UK, most are BNO visa holders who are able to work or study freely in the UK. Although they are not generally be entitled to claim benefits, they are able to access the UK National Health Service.

BNO citizens who are already located in the UK can apply for the BNO visa from within the UK. Some awaiting the visa application decision in the UK have been granted ‘Leave Outside the Rules’ (LOTR), status, allowing them to remain and stay for six months.

According to a survey by, a charity supporting former Hong Kong citizens in the UK, more than half (52.1%) have or intend to move to the UK by the end of this year. This could spark a massive entrepreneurial boom in the UK with 42.5% of respondents saying they plan to start their own business in the UK.

Almost three-quarters are between the age of 30 to 50, with more than 10 years of professional experience, such as accountancy, banking, education, engineering, finance and IT. Over 60% of the potential entrepreneurs own total assets of over £200,000.

The survey found that over 80% of respondents plan to settle in England, mainly in big cities like London, Manchester, Bristol, Birmingham and Reading. Over 60% had moved to the UK with their children and over 15% had already bought property in the UK.

For any BNO citizens in Hong Kong who are looking to relocate to the UK, pre-arrival UK tax planning should be a priority, especially if they want to take advantage of the attractive UK fiscal regime for non-UK domiciled persons – known as ‘non-doms’. UK income tax rates of up to 45% are much higher than those in Hong Kong, while the UK also levies tax on capital gains (CGT) and inheritance (IHT) taxes.

I am currently assisting two families to relocate to the UK and establishing an overseas trust has been the starting point in both cases. Settling non-UK assets that will not be required to sustain the cost of living in the UK into an Overseas Excluded Property Trust (commonly referred as an ‘offshore family trust’) before moving to the UK means that non-UK assets will not generally be exposed to a UK trust entry charge, a ten-yearly charge or an exit charge.

The income and gains that the trust fund enjoys should also be relieved from UK taxation and, on the settlor’s death, the beneficiaries will not generally be liable to IHT, even if they have resided in the UK for more than 15 years and have become deemed UK domiciled.

UK holding companies also offer an excellent vehicle for the acquisition of new and existing trading subsidiaries and are often used to hold overseas investments. A combination of relatively low rates of UK corporate taxation, the availability of double tax relief in respect of foreign income, the large number of UK double tax treaties and the lack of any withholding tax on dividend payments, all make the UK a favourable location for holding companies.

The UK’s position is further enhanced by a participation exemption that applies for dividends and gains. Almost all UK and non-UK dividends received by a UK company are exempt from tax in the UK. There is no minimum ownership period and in general no minimum holding of shares. There is a requirement that the dividend does not form part of a tax avoidance structure, but most trading and investment structures should not be affected.

The UK also has had a favourable exemption in respect of the disposal of shareholdings held as investments. This exemption applies where there is a holding of at least 10% that is held for a period of at least 12 months. There is a requirement that the subsidiary or group must be predominately trading in nature rather than holding passive investments.

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