Offshore strategies are a common way for high net-worth individuals who are UK residents to manage their tax affairs and limit their liability. There are several approaches that may be viable, depending on your specific circumstances:

• An offshore trust: setting up a trust in a low-tax jurisdiction may help you to manage and protect your wealth. Assets placed in a trust are managed by trustees on behalf of beneficiaries. Offshore trusts can offer tax advantages, such as deferral of Capital Gains Tax and Income Tax on trust income. However, this also means putting assets like property into the control of offshore trustees, and you may have minimal input on how these are managed as a result.
• Incorporating offshore companies: Businesses can incorporate subsidiaries in offshore jurisdictions to take advantage of lower corporate tax rates. This can involve transferring intellectual property or other assets to the offshore company and licensing them back to the UK company. However, this approach may not reduce the taxable income of the UK-based business, meaning that it will not always be a viable option.
• Offshore bank accounts: Holding funds in offshore bank accounts can provide tax advantages. It can also facilitate international investments, which may be subject to lower taxes for account holders in the offshore jurisdiction. With this said, it is essential to comply with HMRC reporting requirements and the Common Reporting Standard. Meeting these requirements and complying with tax law can be complicated with offshore accounts and you should receive specialist advice before taking this step.
• Utilising tax treaties: the UK has numerous double tax treaties with other countries. These treaties can be used to reduce withholding tax rates on dividends, interest, and royalties paid to or received from foreign entities. This may affect the circumstances in which you trade across international borders and help you to include tax planning in these decisions.
• Tax residency: You may be eligible to become a tax resident in an offshore jurisdiction, although this involves relocating and meeting the residency requirements of the new country. While this can be a very successful way to limit tax liability, it may also be complicated to manage.

Mitigating tax liability using offshore strategies involves careful planning and adherence to legal requirements, with as much attention paid to ethical considerations and the potential risks involved as to the possible benefits. It is important to remember that the UK has strict reporting requirements for offshore assets and income, and full disclosure is necessary to avoid penalties. In many cases, there are also eligibility requirements to meet before you qualify, and procedures designed to reduce the risk of tax fraud through offshore companies.

As such, tax planning requires a detailed understanding of the options available, as the right offshore strategy will be different for each person. Only a specialist solicitor can help you to structure your estate planning decisions with tax efficiency in mind and consider all of the potential downsides before you make any decisions. For example, the changes in tax laws announced in the Autumn 2024 budget and international regulations can impact the effectiveness of offshore strategies, and you can stay ahead of any such changes by working with an experienced and knowledgeable solicitor.