The UK has welcomed almost 180,000 people from Hong Kong since introducing the British National (Overseas) Visa. If you are moving from Hong Kong to the UK, understanding your UK tax position should be an important part of your relocation planning.
The UK tax system differs significantly from that of Hong Kong and can be considerably more complex. Further changes were introduced to UK tax law from April 2025, including the introduction of the Foreign Income and Gains (FIG) regime, largely abolishing the previous non-domicile tax regime.
In this article, we examine the key UK tax implications of moving from Hong Kong to the UK, including income tax, capital gains tax, inheritance tax, property taxes and available reliefs for new arrivals.
UK tax rates are generally higher than those in Hong Kong, with a top rate of income tax of 45% and a capital gains tax rate of 24%.
Unlike Hong Kong, the UK generally taxes individuals on their worldwide income and gains once they become UK tax resident. However, newcomers may benefit from the new Foreign Income and Gains (FIG) regime.
The FIG regime provides 100% relief on foreign income and gains arising in a tax year, provided the individual has been non-resident in the UK for ten consecutive years before arrival. The FIG regime can then be claimed for up to four consecutive tax years after arriving in the UK. It can also be claimed by individuals who were UK resident for no more than three tax years prior to 5 April 2025, with ten continuous years of non-residence prior to that arrival date. The option to claim FIG relief will then apply for the remainder of the four-year term.
One of the most attractive features of the FIG regime is that overseas income and gains can be brought into the UK without triggering additional UK tax. This may include:
This is a significant departure from the previous remittance basis regime, under which bringing foreign income or gains into the UK could result in a UK tax charge.
The downside is that, even though no UK tax may be payable, your overseas income and gains must still be calculated and reported on a UK Self Assessment tax return in order to secure the FIG relief.
After four tax years of residence, the FIG regime is no longer available. The UK and Hong-Kong Double Taxation Agreement generally allows a credit for taxes paid in Hong Kong against the UK liability, to prevent double taxation. There may be options to restructure your assets and income sources before the end of the 4 year FIG period to mitigate the impact of full UK taxation from that point.
Early planning is essential in this area, to avoid unexpected and avoidable UK tax liabilities.
Those who have been resident in the UK prior to 6 April 2025 and have claimed the remittance basis of taxation, may be able to take advantage of the temporary repatriation facility (TRF). This will allow you to designate foreign income and gains arising before 6 April 2025 to be remitted to the UK at a temporary lower tax rate. The rates are 12% for 2025/26 and 2026/27 and 15% for 2027/28.
Many individuals relocating from Hong Kong move to the UK for employment or business opportunities.
If you perform duties both inside and outside the UK, you can claim Overseas Workday Relief (OWR). This allows earnings for overseas duties to be excluded from UK tax, and applies to the first four tax years after arrival. The pre-arrival conditions are the same as described above.
The relief is capped at the lower of £300,000 or 30% of your total employment income for the relevant tax year. The earnings can be enjoyed in the UK, with no need to have the salary directed to an overseas account.
Employees should also be aware of UK National Insurance Contributions (NICs), which are currently charged at:
If you hold unvested share awards from an overseas employer when you move to the UK, the UK tax treatment can become complex.
Depending on the type of award and the periods to which it relates, part of the gain may become subject to UK tax after your arrival. It is therefore important to take advice before moving to the UK to ensure appropriate planning opportunities are not missed and to avoid unexpected UK tax liabilities.
Many individuals relocating from Hong Kong retain funds within a MPF.
The UK / Hong Kong double tax treaty confirms that payments out of the fund are solely taxable in the state in which the fund is located. Therefore, subject to meeting all the relevant conditions, any withdrawals from the MPF should be tax-free in the UK under these provisions.
Professional advice should be sought before making withdrawals to ensure the treaty provisions apply.
IHT is often one of the most overlooked issues when moving to the UK.
Assets situated both inside and outside the UK will be within the scope of UK Inheritance Tax (IHT) if you become long-term resident. A long-term resident is someone who has been resident for at least ten of the twenty tax years immediately before the tax year being considered.
Even if you leave the UK after becoming long-term resident, you will still be within the scope of IHT until you lose what is known as the IHT ‘tail.’ The length of time to lose this tail depends on the length of residence in the UK when you leave. For example, if you have been in the UK for 15 years out of the previous 20, it would take 5 years to lose the IHT tail. IHT is charged at 40% on assets above the nil rate band, which is £325,000. You can read more about UK IHT here.
Stamp Duty Land Tax (SDLT) applies to property purchases in England and Northern Ireland, with a 5% surcharge applied if you already own other property worldwide.
If you buy a UK property as your only or main home, but you haven’t sold your Hong Kong property yet, you will need to pay the surcharge upfront. You can claim the surcharge back from HMRC if you sell your previous Hong Kong residence within 3 years of buying the UK home.
An additional 2% surcharge can also apply if you buy a property in the UK before becoming UK resident. This is repayable if the SDLT residence rules are met within a relevant period, but the rules are complex and advice is essential.
At Lubbock Fine, our private client team have extensive experience advising internationally mobile individuals, entrepreneurs and families on the UK tax implications of relocating to the UK.
If you are planning a move from Hong Kong to the UK, or have recently arrived, our team can help you understand your obligations, avoid common pitfalls and create a tax-efficient strategy for your new life in the UK. Get in touch with Partner David Portman or Director Gail Swinburn for a confidential discussion.
