UK households rush to 'move money overseas' to escape HMRC tax raid
More and more UK households are sending their cash overseas to escape a Labour Party government and HMRC raid. Savers are moving their money overseas to avoid Rachel Reeves’s punitive tax raids, leading wealth managers have said.
Clients are increasingly shipping their money abroad to avoid higher capital gains tax rates, as well as the slashing of allowances and frozen income tax thresholds, according to Quilter Cheviot and Waverton. Marco Malagoni, of Waverton, said a harsher tax environment for investors meant these wrappers had become more attractive for a wider range of clients.
He added: “Offshore bonds give control of who pays tax and when. You can shelter funds while earning and paying the top rate [of income tax], then draw down quite efficiently in retirement. One of my clients is an NHS doctor earning £100,000, and his wife is also a higher-rate taxpayer. They have a £2m portfolio and they’re putting some of this in an offshore bond.
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“These [strategies] have historically been the preserve of high-net-worth people, but there is now a higher need for tax deferral.” Ian Cook, of Quilter Cheviot, said the Chancellor’s “punitive” tax changes have led to a “big increase” in the number of clients he is advising to funnel their money into offshore bonds.
He added: “One client prior to the Budget was going to keep his pension and spend that last, spending his Isa and other cash assets first. Now the recommendation is to move a lot of the money in cash and Isas into offshore bonds, and to spend his pension.” Mr Cook said: “If you have a child over the age of 18 and they go to university or want to buy a first home, and there are taxable gains you want to take, you can draw the money from the offshore bond in their name.
“This means you can use their £12,570 personal allowance, plus £1,000 personal savings allowance, plus the £5,000 starting rate for savings – that’s £18,570 with no tax to pay. I have lots of clients doing this.”