British Face 2008 Tax Haven Government Pressure
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by: Henri Boulanger
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Word Count: 708
Facing reduction in 2008 is the amount of time British tax exiles can spend in their home country, and it could impact the British economy, claim a company who specialise in tax haven property and residency.
Up until now a British taxpayer could avoid paying income tax by taking residency in a tax haven such as Andorra or Monaco, and be allowed to spend 90 days a year in Britain before falling foul of the Iland Revenue. Importantly both the day of arrival and departure into the UK didn't count as a day.
So technically, a tax exile living in Andorra could drive to Barcelona airport for a 7am flight to London, and given the hour's time difference between Spain and the UK, be comfortably in an office working by lunchtime.
Equally, the same tax exile could leave the London office at 6pm Friday for Barcelona en route to Andorra - and importantly those five days in the UK would count only as three of their ninety day allowance as the day travelling to and from the UK aren't counted. Which allowed business men and women to commute from the tax havens of Andorra and Monaco thirty weeks a year. Some would do Monday to Thursday and could do that virtually all year and still stay on the right side of the British tax man.
But all this is to change if the current Labour Government's proposals in a recent budget statement get the green light, which they are expected to do. The changes could be implemented in April this year, and will mean that the day of travel and arrival into and out of the UK will count as full days, curtailing the amount of time tax exiles will be allowed back into the country in any given year.
In the 1970's the 90 day rule and the day in and out free policy was thought to benefit mainly members of the House of Lords, some of whom lived in Jersey, and it would allow them to attend Parliament for five days a week while Parliament was in session without hinderance.
But since then the popularity of tax havens in Europe, especially Andorra and Monaco, has grown as the British economy has done well and created high earning individuals earning millions a year, many working in the City of London. Others using the tax haven include those Britons selling their companies and the older generation keen to leave their money to their children rather than pay inheritance tax.
The tax haven specialist company says that while the new proposals will cut down the amount of time spent in the UK by the exiles, it is more likely to be London than Monaco and Andorra that will lose out.
'People take residency in Monaco and Andorra to save tax, sometimes 40 per cent of a salary can be taken by the British tax man. With new technology the tax exiles will adapt quickly to spending less physical time in London and just go when it's moderately important to be physically at an office rather than as a matter of course. Which will mean they will be spending more time in Monaco, and spending more of their day to day money there instead.'
'Politically it could make sense for Gordon Brown as the new Prime Minister', they continue, 'to be seen to inconveniencing the rich and showing he is more Old Labour than Tony Blair was. Gordon Brown was in charge of the country's finances as Chancellor of the Exchequer for ten years, and if he thought it would mean less people taking residency in Andorra or Monaco and more money coming in he would have done it years ago.'
Previously a relatively small group of Monaco residents, the number of British people living in Monaco has doubled in the last two years since 2005, with some 3000 now claiming residency in Monaco.
Attaining residency in Monaco necessarily means renting or buying an apartment. The lowest priced property on the market at the moment is a 30m2 studio with a 7m2 balcony in the Fontvieille district at 720,000 Euros. With closing costs this rises to over 800,000 Euros.
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Among the details offered at YourMonaco.com for those thinking of tax havens are Monaco F1 tickets with hotels in Monte Carlo and Monaco, plus nearby hotels in Nice
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