Spotlight on Guernsey: "Come for Tax, Stay for Lifestyle"

Locate Guernsey and BDO Reveal Island's Triple Tax Cap System—and Why Residents' Only Regret Is Not Moving Sooner

Jo Stoddart from Locate Guernsey and Mark Savage from BDO Guernsey delivered the Manchester Conference's compelling pitch for Crown Dependency relocation, emphasizing a counterintuitive truth: while attractive tax structures draw initial interest, lifestyle considerations determine long-term success.

"One of the things is come to escape the UK and stay for the Guernsey lifestyle," Savage opened. "People come for the tax benefits and actually end up staying for the lifestyle. A lot of people say, should have come sooner."

The Triple Tax Cap Structure

Savage outlined Guernsey's genuinely competitive tax regime. No capital taxes exist—no inheritance tax, no capital gains tax, no wealth tax. Income tax operates at a flat 20% rate. However, the critical differentiator proves to be the cap system rather than minimum contribution requirements found elsewhere.

Three tiers structure the offering:

Standard cap: Maximum £320,000 tax liability regardless of worldwide income, though individuals pay 20% if lower.

Split cap: £160,000 on non-Guernsey source income, with 20% on Guernsey-source income. This benefits those with substantial overseas investments but relatively modest Guernsey earnings.

New arrivals cap: £60,000 for the arrival year plus following three years, available to anyone purchasing an open market property within 12 months before or after arrival and spending

£50,000 in document duty (effectively requiring a £1.3 million property purchase).

Additionally, "resident-only" individuals—those spending sufficient time to qualify as Guernsey residents but not principally resident—access a £40,000 standard charge (proposed increase to £50,000), applicable to worldwide income.

Residency: Remarkably Simple

Stoddart emphasised Guernsey's straightforward residency path, particularly the open market property route. "There's no application process, no minimum income requirement, no minimum purchase price, as long as you have the means to buy an open market property—and you can rent as well. You simply come, buy a house, and live here."

The only requirements: holding a UK or Irish passport, BNO visa, or UK settled/pre-settled status, plus a clean criminal record. "I had a gentleman who wanted pre-application approval," Stoddart recounted. "I said, you don't need that. Find the home, use it as a holiday home initially, move when ready. He was blown away."

For those becoming Guernsey resident: 91 midnights in the calendar year (January 1-December 31) suffices. Principally resident status requires 182+ days. The "resident-only" category proves particularly attractive for those splitting time between jurisdictions—five months in Guernsey, five months with a Portugal golden visa, two months traveling elsewhere.

Savage cautioned, however: "Make sure you break your UK residence if that's what you're trying to do. People often don't understand the concept of dual residence." He also warned about the five-year temporary non-residence rules for capital gains tax purposes.

Strategic Tax Planning Opportunities

Several planning strategies prove particularly valuable:

CGT planning: The absence of capital gains tax makes Guernsey attractive for pre-sale relocations. Savage noted some arrive planning one-year stays but remain permanently: "They've gone, oh, should have come sooner."

Pension drawdown: Under the UK-Guernsey double tax treaty, UK pension income taxes solely in Guernsey at 20% rather than UK rates up to 45%. "If you've got a substantial UK pension pot, you're UK resident paying 40% or 45%—come to Guernsey, you're only paying 20%."

Dividend extraction: Dividends from pre-arrival profits paid in the arrival year and following two years enjoy tax exemption. Additionally, Guernsey's dividend credit system means UK company owners relocating to Guernsey effectively draw dividends tax-free due to underlying corporation tax credits.

IHT tail management: While the 10-year tail applies for those previously UK-domiciled, placing Guernsey companies above UK companies creates non-UK situs assets for inheritance tax purposes—beneficial long-term for those not considered long-term UK residents.

Pension transfers: Guernsey residents can move UK pensions to Guernsey Qualified Recognised Overseas Pension Schemes (QROPS), removing assets from UK IHT exposure post-2027 when UK pensions enter the IHT net.

The Lifestyle Reality

Stoddart's presentation emphasized tangible quality-of-life factors: no commute (people will often go directly to the beach after work or swim in their lunch hour), genuine work-life balance, exceptional safety ("if there's a crime, it's front page of the local paper because it's so unusual"), and remarkable community spirit ("people let you out at junctions, stop to let you cross the road").

Connectivity proves excellent: 8-10 daily rotations to London City and Gatwick, under one hour flight time, domestic flight status within the Common Travel Area meaning no passport control.

The testimonial video featured residents emphasizing similar themes. One noted being "seen in A&E within five minutes—crazy compared to the UK." Another: "My only regret is not doing it four years ago when I had the chance."

The Critical Success Factor

Savage concluded with crucial advice: "People who come to Guernsey and love it, really really love it. But we are a small island. There are one or two people who feel like it's a gilded cage, and it's those clients—because we are so close to the UK—where their residence planning goes wrong."

Stoddart reinforced: "Relocation is a really big deal. One of our focuses is getting to know people and understanding what makes them tick so they can decide whether Guernsey is right for them. And the first question I always ask is, have you had tax advice yet?"

In an environment of tightening UK tax reliefs and expanding IHT exposure, Guernsey's combination of genuine tax benefits and lifestyle quality positions it compellingly—provided advisors ensure clients genuinely suit island living rather than viewing it purely as tax arbitrage.