Services we offer
Families have been using trusts to preserve and manage their wealth for centuries. Unlike corporate vehicles, the lack of rigid formal requirements for the creation and operation of trusts, and the tremendous flexibility of trust instruments, make them uniquely useful for estate and succession planning.
UK Inheritance Tax (IHT) is a major issue for individuals who are UK-domiciled or who hold assets within the UK. This will include many expatriates, even if they have been non-UK resident for many years. IHT applies at a rate of 40% on the total value of a worldwide estate above the tax-free threshold of £325,000 (the ‘nil-rate band’).
‘Potentially Exempt Transfers’ (PETs) enable an individual to make gifts of unlimited value that become IHT exempt provided that the donor survives for seven years from the date of the gift. Care must be taken that the transferor does not continue to receive a benefit from the gifted property, or the ‘Gift with Reservation’ (GWR) rules can be applied and the property will still be liable to IHT on the transferor’s death.
Sovereign assists many of its clients with the purchase and ownership of UK property assets. We advise on tax and structuring and can manage the transaction process and financing arrangements. With our knowledge of UK property ownership laws and regulations, along with our tax planning expertise, we can help clients to reduce any potential exposure.
Insurance is one of the most effective ways to manage any risks that could diminish your lifestyle. Developing an insurance portfolio that will protect your assets and provide potential liquidity is a vital part of the wealth management equation.
Sovereign Insurance Services (SIS) was initially established to provide a retail insurance broker capability to the group and has since evolved to offer retail, international and reinsurance broking services to our expanding international client base.
Based in Gibraltar but with a presence in London – the centre of the international insurance industry – SIS will work for the Sovereign client, not the insurer, to obtain the most suitable insurance products at the most competitive pricing levels available in the markets. It will also ensure that you are not paying for insurance that you don’t need.
Domicile, Residence and Visa Programmes
Non-Domiciled Foreigners in the UK
UK residents are generally taxed on the arising basis of taxation – that is, all their worldwide income and gains are taxable in the UK, even if foreign income and gains have already been taxed in another country. In most cases, however, relief is given in the UK for foreign tax paid, either via the provisions of a Double Taxation Agreement (DTA) or via unilateral relief.
Non-Domiciled UK expats living abroad
Liability to UK Inheritance Tax (IHT) is governed by domicile and it is essential to understand that the common law concept of domicile is completely distinct from residence. It is perfectly possible to be considered a resident of more than one country (or none) in a tax year, but an individual must have a domicile and can only have one country of domicile at a time.
A ‘domicile of origin’ is attributed to every person at birth and will depend on the domicile of the appropriate parent at the time of birth. Many UK expatriates fail to realise that they remain subject to UK IHT on their worldwide assets – even when they are no longer a resident of the UK – unless they have actively shed their UK ‘domicile of origin’ and established a new ‘domicile of choice’ outside the UK.
The rights of EU and EEA citizens and their families who were already established in the UK before the end of the Brexit transition period on 31 December 2020 were protected under the EU Settlement Scheme as a part of the EU-UK Withdrawal Agreement. They can continue to live, study and work in the UK, as well as to travel freely between the UK and the EU.
EU and EEA citizens were able to either apply for ‘settled’ status if they had lived in the UK for a consecutive five-year period prior to 31 December 2020; or for ‘pre-settled’ status if they had lived in the UK for less than five years. ‘Pre-settled’ status was granted for five years, during which time holders should become eligible for ‘settled’ status.
Individuals with settled status can spend up to five years in a row outside the UK, the Channel Islands or the Isle of Man without losing this status.
The UK government changed the rights attaching to British National (Overseas) status (BNO) in Hong Kong in 2020. As a result, a new UK visa became available to BNO citizens and their close family members as of 31 January 2021.
The BNO Visa permits Hong Kong citizens with BNO status to come to the UK with their close family members for five years. After five years of residence in the UK, they will be entitled to apply for settlement – termed ‘indefinite leave to remain’ – and after one further year of residence to apply for British citizenship.
BNO Visa holders are able to work or study freely in the UK, including applying for higher education courses. Although they will not generally be entitled to claim benefits, they will be able to use the UK National Health Service (NHS).
The UK introduced a new immigration regime following its departure from the EU, with a points-based system that subjects both EU and non-EU citizens to the same regulations. Points are assigned according to specific skills, qualifications, salaries and shortage occupations, and applicants are required to score a total of 70 points.