Individuals may need to take advice on the timing of their move to Guernsey particularly with regard to:
- the date of departure from the territory where they were formerly resident to the end of the tax year in that territory, in order not to be assessed for subsequent periods unnecessarily; and
- acquiring a new residence status in Guernsey.
Care is required to ensure that the immigrant does not prematurely acquire a "resident but not principally resident" status, on the basis of which he will be assessed not only on Guernsey source income but also on all remittances of income to the Island. For these purposes accumulated income can be traced through capital assets and the only safe course is to take local professional advice before taking any steps to move to the Island.
New residents should review their investments before moving to Guernsey. Investments which may be exempt in the individual's home country, for example TESSAs and PEPs held by individuals moving from the UK, will generally not be tax exempt in Guernsey. Where appropriate such investments should be realised before the individual becomes resident in Guernsey. New residents will also want to consider the incidence of other tax liabilities such as withholding taxes on income and taxes on capital on the investments that they continue to hold outside Guernsey.
It may be important for UK tax purposes to provide evidence of the acquisition of a domicile of choice in Guernsey. This will generally involve severing connections with the immigrant's former domiciliary territory, such as club memberships, ownership of real property, etc, and taking steps to indicate an intention to reside permanently in Guernsey. By custom, this will include the making of a will in the Island, where the laws of succession are to some extent based on ancient Norman law.
Under the "deemed domicile" rules of UK inheritance tax, a person who abandons his UK domicile in favour of a domicile of choice elsewhere is deemed to remain UK domiciled for a period of three years after the actual change of domicile. However certain UK government securities are exempt from these deemed domicile provisions, so that persons whose assets at death are composed entirely of these securities and who are domiciled in Guernsey but deemed, for inheritance tax purposes, to be domiciled in the UK can still avoid all inheritance tax.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.