James Helliwell, a former trader and fund manager, outlines three ways to escape UK tax and property systems: stay registered with a company, move fully overseas, or use an offshore company plus SIPP hybrid. He walks through tax numbers for each option and provides a calculator to compare them.
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Everybody's telling you to leave the uk, but nobody's telling you actually how to do it. Now, in my last video, I explained why Britain was broken. But in today's video, I'm going to show you my plan that I've used personally to create flexibility, freedom and move on from what is otherwise a crumbling system that you're tied to. I'm James. I spent my career in the financial markets as both a trader and later on as a fund manager. And unlike advisors and some of the other people that you might see on the Internet, I have no conflicts of interest here. This all comes from the heart. So here's the trap that most people are in. You've got a house, you've got a mortgage, maybe some savings. And yet, despite the FTSE being at an all time high wage growth, believe it or not, beating inflation for some time now, and interest rates being cut four times in the past year, you're still no better off. So let's go through this step by step to explain what you can do about it and how you can get out of the uk. Now, the chances are, if you've looked into managing your own money, you've probably seen a million videos on the Internet already, perhaps here on YouTube, saying to open up an ISA, pay a few hundred pounds a month and just buy a global ETF and chill. We're talking about potentially everything that you've worked for. And this is not the kind of decision that you should take lightly. A typical advisor will probably command about two and a quarter percent per year when you add up the various fees. And that might not sound too bad at first, but when you add it together, compounded over a typical investing horizon, it actually adds up to more than one third of the total amount that you would otherwise have had in your portfolio if only you could have managed it yourself. And on top of that, over 20 years, only 1 in 20 professional fund managers beat the market after fees. Think of it in terms of Russian roulette. You've got three bullets in the chamber rather than one and you're going to spin and then pull the trigger. Not once, not twice, not thrice, but four times. You stuck between trying to go it alone. Wishy washy advice on the Internet, but I just put it in ETFs and whatever, and then going to outsource your anxiety to an advisor who's just going to take the piss while he's on the golf course. I promise you that there is a solution here. So let me take you through that. Think of these as three pillars for freedom. So pillar one, flexibility. The return in property isn't all that it's cracked up to be after you take into account the various things, fees and taxes and all the rest, particularly under the current government. I've actually built a tool which shows you exactly how it works and it'll give you the breakdown so you can make a comparison of exactly how it might work through for you based on what you've got to invest. There's a link in the description, if you want to check that out. Anybody who tells you any different is just referring to leverage, the amount of money that they've been able to borrow, which is very, very sensitive, of course, to interest rate hikes, just as we saw in 2022 and 2023, when many UK landlords learned the lesson that we know in markets that leverage cuts both ways. It amplifies things on the way up and it also amplifies things when they move against you. So renting doesn't make you poor, it's being trapped and tied to the old system under the UK that does. So that's the first pillar. So once you've freed up your capital by considering selling your home, you want your capital working globally, not demanding that you're tied or fixed to the uk, beholden to hmrc, the tax body. And I'm going to show you how I've structured things personally in just a minute and how you can do the same. The third and final pillar is mobility. This ultimately leaves you in a prime position. If the country recovers, then great, you don't have to do anything. But if it doesn't do and you have enough, you can pull the ripcord on that parachute that you now have. It's all well and good talking about these things, but you need practical steps. So option A, remain UK registered, so it's less hassle. You don't have to think about applying for overseas residency, filling out all the exit forms and going through all of that shit with the uk. What I would do is register a UK company. You need to ensure that you get paid as a director. What this will enable you to do is to better manage your tax liability, albeit still based in the UK and beholden to HMRC and policy changes long term. And if you are to move abroad at a later date, you're not going to be able to continue making contributions to things like an ISA or a sip, these tax wrapper accounts. So it might not be ideal, but it's not the end of the world. You shouldn't overlook this if you're earning a bit less than the scenario that we're about to go through now. So moving on to option B, move everything overseas. The amount of people that I meet out here in Bali and I've met on travels who are living between places like Dubai and maybe Singapore is endless. You just end up paying for it through inflated rental prices. And of course you're taxed on consumption rather than indirectly on your paycheck. The strength behind having an overseas company is that in many of these jurisdictions, unlike the uk, there is no tax to be paid on any investments that you make using the company's profits. Your money's able to compound in the stock market in a very similar way to how you might otherwise approach and treat your pension if you using a sip. And you'll see why I mention it in option C in a moment. The reason this didn't work for me and why it might not work for you. There are all of these additional hurdles which in the beginning it's yallah, habibi, come to Dubai, it's made to feel very easy. But in the end there's domestic property investment requirements, over half a million dollars, you funnel a load of money into the legal system for solicitors fees, sink all of the cash, all of the assets, or vast majority of it, unless you're ultra wealthy, into the local property market, which again, the whole purpose of this is to have flexibility and freedom and not to be tied to one. And it tends to be in places frankly that you can't live in comfortably all year round. I wouldn't want to spend 16 months a year in Dubai, given how intense the heat is in summer. One way or another, you end up paying for it through rent, consumption and it's all inflated by demand to be in these tax havens. Now, of all these options, just to wrap up, there is something known as the golden visa in Thailand. And this, as things stand, will see you be able to take up tax residency there with payment of, I think it was about 10 to 15 grand. And that gives you a five year window where any money that you've made, provided that you draw it in the next calendar or their tax year, is not subject to income tax. So this can be a very efficient way to mitigate your income tax liability, perhaps at a later date when you've already grown it in a business. And then it comes to the point of drawing down on whether it's your pension or your pseudo pension, which that corporate entity, the overseas business, has provided a second vehicle for all of this will make sense in a moment when we go through option C. This enables me to legally avoid, not evade, tax, whilst not being beholden to these 90 day rules. So let me show you the breakdown of how this could compare tax wise and whether or not it might be a good option for you guys to consider as well. So let's say you earn the average UK salary £40,000 a year without contributing to a pension, which comes off your company tax bill. As I'll show you in a minute. The company profit after you've taken the director's salary, which is about £12,500 tax free, leaves you with £27,500,000 remaining. You're going to have to pay corporation tax on that. That leaves you with 22,000 remaining in dividends and you would face income tax after the dividend allowance of 1,900 quid. We'll call it 2,000. So overall, your net take home pay under this scenario without contributing to a pension or a SIP, leaves you with 33 grand from your headline 40k earnings. So your effective tax rate is just under 18%. But stick with me, because this is where it gets really interesting. You can see the side by side comparison here. Not making any pension contributions and then contributing 10 grand a year to your SIPP, your take home pay jumps up to about £35,500. So your effective tax rate is reduced from 18% towards 11%. But this is where you can really begin to influence things. What I'm about to show you here is exactly what I do. So you can pay just 8% tax. In other words, keeping 92 pence out of the pound for the first 100 grand of earnings. And beyond that, there's something else I want to show you. We'll assume that you earn just over 100 grand. It's 103 and a half K. You take your director's salary again of 12 and a half thousand, but this time you contribute the full allowance of £60,000 a year to your SIPP, which is an astonishing sum. Believe me, you're set when you can afford to do this. The taxable profit after those contributions is 30 grand your take home pay. So that director salary of 12 and a half grand plus dividends is 35 grand. Remember, you've made a 60 grand contribution to your SIP as well. Your money's taken care of long term. And believe me, living somewhere like Bali, a couple of grand a month is more than enough. Remember what I said earlier about being able to invest the remaining profits that you Otherwise haven't drawn as dividends. It's still your money in the stock market without paying capital gains tax. This is the tool I've built which will help calculate this for you. And you can try it yourself and see exactly when this hybrid model overtakes your current setup. This is the closest thing that ordinary people like you and I have really beginning to make tax efficient and make things work for you without going through all of the incredible complexity and opacity in setting up these offshore structures, these complicated systems that these advisors ultimately lure you into and more often than not cost you a fortune in fees and can end up going very badly. So to summarize what we've learned here, we've looked at the three pillars to create freedom. I've then shown you my system with the three options that you have, whether that's to remain UK registered, least hassle, best option for perhaps your first 40k or up to 100k if you're contributing to a pension. Option B, to move everything overseas, which severs all ties with the UK immediately, but is a lot more complex, expensive and very often something of a false economy. Also leaving you then committed to a new tax regime which can be hard to get out of. And then the third option, option C, the one that I personally use, which is this hybrid approach, still doesn't require you to sever ties with the uk. That's your call. You can do so at any point, but it gives you the flexibility to still operate with geographical freedom, with financial freedom, and at a future point when you're ready to draw down that income, consider changing your tax residency, something like perhaps Thailand's Golden Visa. So that's what I want to leave you with. This is the exact system that I've used, not only personally, but I'm helping my clients with inside of my mentorship. And if you're interested in this, then book in a call with me and I'll gladly talk you through it too. If you want to see exactly how I invest my money once it's inside of these structures, then watch this video, which I think you're going to love.
