Property on the Isle of Man is set to attract more high-profile UK incomers

'Freedom to flourish' thanks to low Isle of Man taxes
Property on the Isle of Man is set to attract more high-profile UK incomers as a result of the UK government's tax rises for the rich, says Mike Goodman

Many wealthy UK residents move to the Isle of Man to take advantage of its low taxes.
The Isle of Man government uses the slogan “Freedom to Flourish” in its efforts to attract wealthy entrepreneurs, new business and investment to its shores. It seems to be working, with some help from the UK government’s tax rises for the rich.
The latest high-profile incomer is property tycoon John Morphet, 55, proud new owner of Bishopscourt, a historic mansion set in10.4 acres of gardens. Mr Morphet bought the house in March for £5 million with his partner, Donna, and will use some of the property as his business headquarters. Parts of Bishopscourt date from the 14th century.
Mr Morphet is from the North West and made his fortune from developing holiday caravan parks. He sold the business a couple of years ago, but still runs the Royal Westmoreland Estate in Barbados, an exclusive golfing resort that attracts the rich and famous. He ranks 657th in The Sunday Times Rich List, and has a reputed personal fortune of £85?million.
David Creane, chairman of Manx estate agents Cowley Groves, who handled the sale, says: “I expect more high-end sales of this kind as more wealthy UK residents leave for tax reasons. Most of my would-be buyers come from the North and the Midlands, as they are already familiar with the Isle of Man.
“Many of the high net worth individuals who come here want to carry on in business, and the island provides an excellent environment in which to do that.
“Property on the Isle of Man is still competitively priced compared with some other offshore centres, and there are no residency restrictions. But the differential with mainland UK is narrowing at the top end, as prices increase.”
From the tax point of view, Mr Morphet and other wealthy Manx residents are “on the money”. The top rate of personal tax is 20p in the pound, and no individual can pay more than £115,000 per year in income tax. This applies to income from all sources, and there are no capital taxes on the island.
For the very wealthy, the effective Manx income tax rate is therefore lower than in the Channel Islands. About 90 Manx residents enjoy this “tax cap”, according to the Manx Treasury.
Most companies on the Isle of Man are exempt from corporation tax, but there is a 10 per cent levy for certain property and financial transactions. However,
the island levies VAT and excise duties, and these will rise in line with the UK from next April. Indirect taxes account for more than half the island’s tax revenues.
British expatriates investing with Isle of Man financial institutions also enjoy tax advantages, as all income is remitted free of local tax, and there are no capital taxes such as capital gains tax to worry about.
The one exception is income drawn from individual pension plans (QROPs), which are liable to Manx income tax. This can be offset through double taxation agreements.
The island is a party to the European Savings Directive, which requires interest on savings held by residents of EU member states to pay a withholding tax of 20 per cent, or the savings provider to provide information to the tax authorities where the saver is resident. From July 2011, the withholding tax option will no longer be available as far as the Isle of Man is concerned.
The authorities have also signed 15 Tax Information Exchange Agreements and are co-operating with international efforts to clamp down on tax evasion and money laundering.
The island is also a major centre for offshore life assurance, a useful tool for financial and pension planning for expatriates and UK residents. The rise in UK income and capital gains tax, and restrictions on pension tax relief have made offshore life assurance even more attractive than it was previously.
Last year, the island’s life assurance companies attracted £6billion worth of annual premiums and this is expected to rise further this year.

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