The tax burden in the UK is at its highest level in over 75 years, with the number of people paying and the amount being paid continuing to grow year on year.
And it seems that Brits are looking for ways to keep more of their money in their own pockets, with Google searches for ‘how to reduce capital gains tax’ increasing by 24% in the last three months.
So, to help people looking to take steps to reduce their tax burden, Sotia Hadjineocleous, CFA, Financial and Investment Manager at Domenica Group, has revealed how much top earners can save by moving abroad, specifically to Cyprus.
“The amount saved always depends on your income level and where you choose to move. But for higher-rate taxpayers, the right choice can make a substantial difference.
“A UK higher-rate taxpayer earning around £100,000 may achieve annual net savings in the region of £10,000 or more, depending on income structure and eligibility for Cyprus’s 50% employment income exemption.
“That’s because in the UK, income tax and National Insurance at that level can typically be in the region of £31,000 to £32,000 a year. By comparison, Cyprus can offer a much more favourable tax structure for qualifying new residents, including a higher tax-free threshold and incentives such as the 50% exemption on qualifying employment income.
“When things are structured properly and combined with Cyprus’s incentives for new residents, this can significantly increase take-home pay. Over a number of years, the difference could become substantial for internationally mobile professionals.
“But it’s important to remember these savings only apply where individuals properly break UK tax residency under the Statutory Residence Test and establish genuine ties abroad. The most common mistake when doing this is assuming that simply buying property overseas or spending fewer days in the UK is enough. It isn’t.
“Residency planning must be structured carefully to avoid unexpected UK tax exposure. It’s also worth noting that outcomes can vary significantly depending on how income is received, whether through salary, dividends or capital gains, and whether individuals fully qualify for available exemptions.
“And for many people, the decision isn’t driven by tax alone. Lifestyle, business flexibility and long-term financial planning all play a role.
“Despite this, tax residency is one of the most powerful financial planning tools available to internationally mobile individuals. Where you live determines how you are taxed, and for some people, that choice is more flexible than they ever realised.”
