Update: Why HNW business migrants are relocating to the Isle of Man rather than the UK

Background

The United Kingdom has always been a popular destination for high-net-worth individuals (HNWIs) from around the world due to its cultural, educational, and legal environment. 

The UK Tier 1 Investor Visa ended in February 2022, with the result that the main available remaining option for UK residency is now the business migrant visa route. This pathway can lead to indefinite leave to remain (ILR) after 3 years and full UK citizenship after a further 12 months.

However, restrictions on the types of businesses eligible for residency via this route, and the use of external endorsing bodies, is causing problems for even well-funded and robust proposals. HNWIs are also viewing the UK more negatively following the dismantling of the previously attractive “non-dom” (non-domiciled status) tax regime. 

These changes have contributed to an upsurge in interest in the Isle of Man business migrant visa over a UK visa. Both countries are part of a common travel area, and citizenship in the Isle of Man leads to a full British passport.

Reasons why the Isle of Man is an attractive place to live and do business 

The Isle of Man is the only entire nation in the world designated a UNESCO Biosphere. 

The Isle has a very low crime rate and is ranked the safest place to live in the British Isles. 

Its open housing market: Houses in the GBP 2 to 4 million bracket cost 40% less than in Surrey, and 60% less than Jersey, based on price per sq. metre.

There is no capital, inheritance, or wealth taxes, and the top rate of income tax is 21% compared to 45% in the UK. Additionally there are tax cap and concessional treatment options.

The Isle of Man boasts seamless business transactions with the UK due to a full double tax treaty (DTT) and a common customs and VAT area. Compatible common law legal systems also offer excellent security for investments.

Corporate profits are subject to income tax of 0% and there is no withholding tax on dividend or interest payments.

The Isle of Man has been voted the best place to live in the British Isles (HSBC expat survey 2019).

A comparison of UK and Isle of Man business migrant Innovator routes

Both jurisdictions require an innovative, viable, and scalable business idea; however there are differences in the application process, scope of eligibility, and the targets to be achieved.

The Isle of Man processes applications internally, allowing a greater degree of responsiveness and communication, and, in contrast to the UK, potentially allows for, e.g.:

Investment in, or the takeover of, an existing business;

The establishment of a branch or holding company for an overseas enterprise; 

Franchised businesses; or

The setting up of a family office.

In the UK, after three years, a business migrant must meet two out of seven performance measures, of which the creation of five jobs is one. By contrast the Isle of Man’s main requirement is at least three new jobs being created. 

The Isle of Man’s minimum investment of GBP 50,000 is cost effective compared to typical “citizenship by investment” programmes.

Successful applicants to the Isle of Man come from all four corners of the globe. For a recent case study see: Dan Harris – Growing an international business from a Biosphere.

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Guy Wiltcher is a chartered accountant and chartered tax advisor. He is a former managing partner of Greystone LLC Chartered Accountants, for whom he now works as a consultant.