MONEY CLINIC | My son has permanent residency in the UK - should he emigrate financially?

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Financial emigration should only be considered if there is a real purpose to financially exit the South African financial system.
Financial emigration should only be considered if there is a real purpose to financially exit the South African financial system.
Boza Cucek / EyeEm / Getty

A Fin24 reader who is concerned about her son wants to know if it would be best for him to financially emigrate to the UK.

She writes:

My 28-year-old son, a South African citizen, is employed as a civil engineer in the UK, where he has permanent residency. 

He owns property here, is a beneficiary of a trust and may one day wish to return to South Africa. 

Would it be advisable for him to emigrate financially?

Ryno Viljoen, chief executive officer of FinGlobal, responds: 

Financial emigration should only be considered if there is a real purpose to exit the South African financial system. Based on the information provided it probably serves no purpose for your son to go this route as there is no real benefit to be derived.

Because he lives in the UK on a permanent basis, he is deemed a tax resident in the UK and will only be liable for tax in South Africa based on his SA-generated income, i.e. rental from properties, distributions of income from the trust.

Being a UK tax resident also exempts him from "expat tax" in SA.   

As he might intend to return to SA or have the trust property available to him as a home, the SA Revenue Service (SARS) may still classify him as an ordinary resident of SA in terms of tax. 

This will put him in a position that SARS as Her Majesty's Revenue and Customs will view him as a tax resident. The tiebreaker clause within the double tax agreement between SA and the UK will, however, apply and because his centre of vital interest is in the UK, the UK will deem him an exclusive tax resident.  

Questions may be edited for brevity and clarity.

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