Hong Kong is a fantastic destination for UK expats and their families, with an international community, great food, and a vibrant culture. As a gateway into global markets, it also offers opportunities with multinational companies and in the international financial sector.
Relocating to Hong Kong from the UK is exciting, but there are several important steps to work through before you can settle and build a new life in the country. One of the priorities is to work through Hong Kong’s visa requirements and obtain an ID card. You may also need to factor in the cost of living in one of the world’s most densely populated cities, and some of the other geographical changes, including the sub-tropical climate.
Understand your finances and taxes in Hong Kong
Living in Hong Kong comes with many benefits but these do come at a cost, with the region being ranked as the fourth most expensive city to live in by the World Economic Forum in 2022.
From a financial perspective, living and working in Hong Kong means you can enjoy a much lower rate of Income Tax; with a top rate of 17% compared to the UK’s 45%, you can enjoy a significant boost to your income.
There is also no Capital Gains Tax in Hong Kong, so there is the potential to realise investment profits tax free.
However, the cost of living in Hong Kong can be high, with accommodation and school fees significantly more than in the UK, so it’ll be important to carefully consider your budget. Ahead of a move, you’ll also need to review your UK tax position, and advise HMRC of your move to Hong Kong. Any move is almost certain to happen part way through the year, and so working with a tax expert can help you to reclaim any additional tax you might have paid.
Cost of living in Hong Kong
Housing in Hong Kong is notoriously expensive, so it’s worth keeping this in mind as you make a decision about where to base yourself. Apartments can be small with little or no storage, and you should expect to pay a lot more than you may be used to in the UK. Older property and apartments or villas outside of the city centre can sometimes offer a better option, although you may have a commute to work and schools to consider. Food is expensive too, with most produce imported, and eating out can be pricey, especially in Western restaurants. On the other side, public transport is reliable, clean and cheap, and utility bills generally lower than in the UK, which can help to offset some of those other costs.
Building up your pension while living in Hong Kong
As part of your move to Hong Kong, you should consider your retirement planning. Understanding some of the key steps when retirement planning and building up your pension as an expat is critical.
Although you may be enjoying a high salary as an expat, in many countries a pension scheme is not a statutory requirement. As a result, it will be important to ensure you have a robust pension plan in place. If you take up an employed role in Hong Kong you will likely be enrolled in a scheme via the Mandatory Provident Fund (MPF) system. The mandatory contribution limits are low, and the investment choices limited, so this scheme alone is very unlikely to satisfy your requirements for an adequate retirement plan.
It’s also worth noting that expat employment situations are often changeable, and in the future, you may face a relocation, return to the UK or other circumstances which are out of your control. Even if you have a pension scheme with your employer, any changes to your role can result in your pension being affected, which can be a complex situation to manage whilst overseas.
Thankfully there are a range of specific expat pensions designed to help expatriates have more control and flexibility of their retirement planning.
Reporting to the tax authorities
You should notify HMRC, the UK tax authorities, if you are moving overseas. A P85 form notifies HMRC that you are leaving the country and helps ensure that you’ll be taxed appropriately in the UK. In Hong Kong, Income Tax rates work on a scaled rate, like that of the UK. A personal allowance is available, with rates applying from 2% to 17% or a flat 15%. Capital Gains and Inheritance (or Estate) Tax does not apply here but may do to your UK or worldwide assets if you continue to be domiciled in the UK.
Plan your property situation before relocating to Hong Kong
Planning to keep hold of your UK property whilst you live or work overseas can be a sensible investment option. It’s particularly practical if you expect to return after time in Hong Kong. If you’re considering renting your property out, you may need to consider the Non-Resident Landlord Scheme to ensure that any UK taxes are properly calculated and paid.
Hong Kong Visas
If you are a UK citizen and are looking at visiting Hong Kong you can normally stay for up to six months without needing a visa. However, if you are looking at working or studying in Hong Kong a visa is required. For more information on visa requirements, we recommend checking www.gov.uk and www.gov.hk.
Other considerations before moving from the UK to Hong Kong
- Wills and Estate planning – as an expat, your financial circumstances are likely to change. If you’ve property or assets in different countries, you might need additional Wills to cover jurisdictions outside of the UK.
- ISAs (Individual Savings Accounts) – if you hold an ISA, it might make sense to top it up before you leave the UK for Hong Kong. You won’t be able to do so once you’re no longer resident in the UK. However, you can continue to manage the funds within the ISA during your time abroad.
Expat communities in Hong Kong
With an estimated 50,000 UK citizens living in Hong Kong there is a large British expat community in the city. If you are looking to join an expat community when you arrive, it’s worth exploring the many options available including the prestigious Hong Kong Club. With many expats moving for work or career progression you may also want to connect with the British Chamber.
Financial advice before moving to Hong Kong from the UK
Working with a knowledgeable financial planner before moving to Hong Kong can help you make the most of your new expat status, and the advantageous tax regime. With offices in the UK and Hong Kong we can help support you fully in both countries, and many of our team have first-hand experience of making a move between the UK and Hong Kong themselves. We can support you with all aspects of your finances – from exiting the UK tax system and sensibly managing any income from a UK property, to ensuring that your pension and retirement plans remain on track. Get in touch with our team here.
Important Note
The information contained within this document is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
This article is distributed for educational purposes only and should not be considered financial advice.
If you are unsure about the suitability or otherwise of any product or service, we recommend that you seek professional advice.
The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
If you are unsure about the suitability or otherwise of any product or service, we recommend that you seek professional advice.
Tax treatment depends upon individual circumstances and is based on current UK tax legislation, that is subject to change at any time.
The Financial Conduct Authority does not regulate will writing and some forms of estate planning.
