The UK has long existed as an attractive location for financial investment and is home to one of the financial capitals of the world – London. With its highly regarded legal framework, robust tax regime and its position in the centre of the world’s time zones, it’s easy to see why the UK holds such a prestigious place in the global financial services industry. This remains the case despite recent sweeping tax changes from the government (who have been widely criticised for allegedly undermining the UK’s opportunities on the international stage).
The Trend Towards UK
In recent years, there has been a change in attitude towards using the UK for wealth structuring. Where in the past there may have been a real desire to avoid UK structuring options and instead go “offshore”, there are now many ways the UK can offer attractive structuring opportunities.
Increasingly, both individuals and corporate institutions are basing their decisions on where to structure on a combination of factors; taxation now rarely being the key driver. In some cases, the perceived reputational risk of being associated with offshore structuring can be a deciding factor as to why individuals and corporates are choosing to move their operations to the UK.
There is also an increased desire to be contributing to the UK public purse. The idea of being fully tax reported in the UK is attractive for some, (perhaps for reputational reasons as mentioned above), but also for the moral notion of contributing taxes towards public institutions such as the National Health Service or the National Education Department.
Another trend we have seen is that for individuals in recent years, there is a real drive towards simplicity. Whilst some wealthy families have undoubtedly left the UK for more favourable tax regimes (such as Italy, Dubai, Switzerland or Monaco), others have decided to stay in the UK and to pay UK tax than checking the calendar and ticking off days.
Finally, a key advantage of structuring in the UK is the ability to retain control. Fully managed and controlled UK structures are on the rise and having the main decision makers on the boards of corporations, family investment companies or indeed acting as trustees to trusts is important. However, the underpinning principles of governance should not be forgotten. There is still an important place for fiduciaries and corporate service providers in the onshore market, even significant influence is retained by clients.
Offshore and Onshore – The Hybrid Model
Privacy and anonymity is still a huge concern for many and the insertion of a Jersey company into a mostly-UK structure can provide the required protection of individuals’ personal details, whilst maintaining a fully compliant and UK tax resident structure. This hybrid onshore/offshore model can also present advantages in terms of estate planning.
Conclusion
Despite recent adverse headlines, the UK remains the jurisdiction of choice for many individuals and corporates as they put estate planning and corporate structures in place. The lines between “onshore” and “offshore” are looking more blurred all the time.
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