UK Immigration Options for South African Citizens

(A) UK Immigration Options for South African Citizens
Graeme Kirk – Ellisons Solicitors Introduction

The UK has for many years been a very popular location for South Africans looking to relocate and has been the beneficiary of significant inward investment by South African Corporations and Entrepreneurs. There are many UK Companies owned by South African Investors and Entrepreneurs and also South African investments throughout the United Kingdom. In addition, many skilled South Africans have made their careers successfully in the UK.

London continues to be one of the leading Global financial centres, even after Brexit and the United Kingdom is still considered to be a great place to do business, both in relation to ease of business transactions, but also the advantages of a strong independent legal system with a high reputation. There has also been a considerable amount of South African investment in other UK regional cities including Birmingham, Manchester, and Leeds.

Many South African families have also taken advantage of the opportunities offered by the English private school system, which has a high international reputation, to educate their families in British schools and thereafter British Universities. A number of UK Universities, notably Oxford and Cambridge Universities, are recognised as among the leading Universities in the world.

The UK also offers many tax benefits to South African families living in the UK under our non-domiciled tax arrangements, which, if correctly adopted, will mean that a South African citizen living in the UK should only pay UK income tax on UK source earnings and not on overseas income.

The Immigration Team at Ellisons Solicitors, led by Graeme Kirk and Sohan Sidhu, has been recognised for many years as one of the UK’s leading Immigration Teams and has acted for South African clients investing and working in the UK for over forty years. Under the UK Immigration rules, a main applicant, e.g. a South African Investor is entitled to bring his/her spouse/partner and children under eighteen to the UK and all family members will potentially qualify for permanent residence rights (known as “indefinite leave to remain”) normally after five years of residence, although this can be accelerated in some cases, as set out below.

The main routes for immigration to the UK for South African nationals are as follows: –

1. Commonwealth Ancestral Visa

South African citizens who are able to prove that they have at least one British born grandparent and intend to work in the UK, can apply for a Commonwealth Ancestral Visa which is granted for five years and leads at the end of five years to indefinite leave to remain (permanent residence), subject to the conditions for indefinite leave to remain being met.

There is a requirement for the visa holder to take employment or self-employment in the UK but without restriction.

2. Skilled Worker Visa

Skilled Worker Visas, formerly called Work Permits, are available for skilled South Africans who have obtained job offers for qualifying positions from UK Companies, who hold Sponsors Licences.

It is now possible for skilled worker visas to be obtained by UK Companies for South African nationals who wish to invest in a UK Company, and also take up key roles in the management and running of the Company.

The UK Company would need to hold or obtain a UK Sponsors Licence and then issue a Sponsorship Certificate for the South African national. The Skilled Worker Visa leads to the possibility of applying for permanent residence (indefinite leave to remain) after five years of residence in the UK under this heading.

There is a requirement for the Skilled Worker to satisfy an English Language Test at Level B1 in Speaking, Listening, Reading and Writing, unless the applicant holds a UK Degree qualification.

3. Global Mobility Visa – UK Expansion Worker Visa

This Visa has replaced the long standing “Representative of an Overseas Business” Visa and allows a South African Company which wishes to open a branch or subsidiary in the UK to send five key individuals, who have worked for the Company for at least twelve months to the UK to start a UK branch or subsidiary. Minimum earnings requirements are laid down and, most importantly, the visa does not lead to rights to indefinite leave to remain. The visa can be granted for two years at maximum and, during the period of the visa, the applicant would need to transfer to a Skilled Worker Visa in the UK to start the route towards indefinite leave to remain.

It will be possible to switch from the Global Mobility Visa to the Skilled Worker Visa without leaving the UK.

It is also possible to obtain what are called Senior or Specialist Worker Visas, Graduate Trainee Visas, Service Supplier Visas and Secondment Worker Visas, under the Global Mobility Visa category. However, none of these lead to indefinite leave to remain and the Skilled Worker route should be used where possible.

4. Innovator Founder Visa

This new visa category can be used by South African Entrepreneurs who wish to start a business in the UK which is both innovative and scalable on an international basis. This is a complicated visa to obtain and requires prior endorsement from a UK Endorsing Body. It will be necessary for the applicant to prove that he/she has sufficient funds available for investment in the new UK business to start the business successfully. Evidence of previous business experience will normally be required.

There is also a requirement to satisfy an English Language Test at Level B2 in Speaking, Listening, Reading and Writing.

Under this category, it is possible to apply for permanent residence (indefinite leave to remain) after three years.

5. Global Talent Visa

This is a limited visa available to applicants who are able to satisfy the difficult tests that they are world leaders, or likely to become world leaders in their fields of specialisation in any of the following:-

a) Academia and Research

b) Arts

c) Engineering

d) Digital Technology

These visas can be issued for up to five years and require prior endorsement from an Endorsing Body in the UK, but can lead to indefinite leave to remain rights after three years.

6. Spouse/Partner Visa

It is possible for a South African citizen who is married to a British citizen or person with Settled Status in the UK, or in a Civil Partnership with someone, or have cohabited for at least two years before the application, to apply for a Spouse/Partner Visa for the UK. It will be necessary for the applicant to show that the financial requirements for the Spouse/Partner Visa are met. This can be done from a number of different routes, including sponsor’s earnings from employment or business, investment income of either or both of the couple, or capital savings from either or both of the couple, but currently there is a requirement to prove the equivalent of annual income of £18,600.00, although the applicant’s earnings from work are excluded from this calculation. The minimum annual income required will increase to £29000 on 11th April 2024 ,with further increases to around £34500 later in 2024 and to around £38700 early in 2025.

The Spouse/Partner Visa is granted for an initial period of thirty months and can be extended for a further thirty months, leading to indefinite leave to remain rights after five years, subject to the conditions for indefinite leave to remain being met.

Conclusion

Ellisons Immigration Team will be delighted to provide advice and assistance to South African clients wishing to consider these options. South African clients should note in particular that Brexit has had no effect whatsoever on UK immigration options for them. Ellisons can also provide advice in relation to family immigration to the UK, the Commonwealth Ancestral visa (available to South African citizens with British born grandparents) and also Student and Visitor Visas.

Ellisons Solicitors is a full-service English law firm which has been in existence since 1750. We can provide advice and assistance in most areas of English law, including company law, commercial law, property law, dispute resolution, employment matters, family law and tax law.

Please contact Graeme Kirk or Sohan Sidhu, the Ellisons Immigration Team on either Graeme.Kirk@Ellisonssolicitors.com or Sohan.Sidhu@Ellisonssolicitors.com for advice and assistance.

(B) IMPORTANT LEGAL CONSIDERATIONS FOR SOUTH AFRICAN CITIZENS EMIGRATING TO THE UK
– Louis Stroebel – SST Attorneys

For South African individuals considering a permanent move to the UK there are various statutory provisions to take into account. A South African citizen taking up permanent residency in another country could have different legal consequences under South African citizenship laws, tax laws and exchange control regulations. This overview aims to provide a concise overview of these aspects.

1. Citizenship

In terms of the South African Citizenship Act (Act 88 of 1995) (“the Citizenship Act”) a person obtains South African citizenship by birth, descent or through naturalisation1.

Where a South African resident obtains citizenship or nationality of another country, voluntarily and formally, the South African resident will be entitled to retain their South African citizenship2 if such citizen does not renounce his/her South African citizenship3 or if he/she is not otherwise lawfully deprived of his/her South African citizenship4.

It is therefore possible for a South African citizen to have dual citizenship and to remain a South African resident, even if he/she permanently resides in another country and has become a citizen or national of such country.

A South African citizen should however bear in mind that in terms of section 26(B) of the Citizenship Act, it is a punishable offence for a South African citizen of 18 years and older to leave or enter South Africa on a foreign passport. It is therefore essential for every South African citizen (even if he/she permanently resides in another country or is a citizen of another country), to have a valid South African passport when entering or leaving South Africa.

2. Exchange Control Regulations

The South African Exchange Control Regulations5 (“Excon Regulations”) regulates the flow of money and assets into and out of South Africa.

The Excon Regulations differentiates between a South African that is “non-resident” and one that is “resident temporarily abroad”:

A “non-resident” is defined as a person (natural or legal entity) whose normal place of residence, domicile or registration is outside of the Common Monetary Area (“CMA”)(Lesotho, Namibia, South Africa and eSwatini).
A “resident temporarily abroad” is defined as any resident who has departed from South Africa to any country outside the CMA with no intention of taking up permanent residence in another country, but excluding those residents who are abroad on holiday or business travel.

Where a private individual becomes a non-resident for tax purposes in South Africa, such individual may be allowed to transfer his/her assets abroad, provided that:

he/she has ceased to be a resident for tax purposes in South Africa;
he/she has obtained a Tax Compliance Status (TCS) in respect of emigration from SARS; and
he/she is tax compliant upon verification of the TCS.

Such non-resident may in the same calendar year that he/she ceased to be a South African tax resident, transfer up to R1 million as a travel allowance, which is a once-off dispensation and cannot be used in subsequent years. In addition, the non-resident may export household and personal effects up to R1 million per family unit within the same calendar year. In addition to the aforesaid, the individual may be allowed to transfer up to a total amount of R10 million per calendar year, provided that the individual is tax compliant. Where a non-resident wants to transfer more than R10 million to another country, a more stringent verification process will be undertaken by SARS as well as the Financial Surveillance Department of the South African Reserve Bank (“SARB”).

Where a private individual is a resident temporarily abroad, he/she may on departure and annually thereafter, avail himself/herself of the R1 million Single Discretionary Allowance and the R10 million Foreign Capital Allowance without returning to South Africa. Should the resident temporarily abroad wish to take greater amounts out of the country, they first have to obtain approval from the Financial Surveillance Department of SARB.

From 1 March 2021, a South African that has become a non-resident, will only be able to access their retirement annuity or preservation fund benefits if they have not been a South African tax resident for an uninterrupted period of 3 years on or after 1 March 2021. If the non-resident, however, have not accessed their pre-retirement withdrawal benefits from their preservation fund, they will still have immediate access to this withdrawal benefit. This 3 year requirement adds a degree of permanency to a proposed relocation to another country, discouraging those that only leave South Africa for a short period of time to withdraw their retirement savings.

The Authorised Dealer Manual issued by the Financial Surveillance Department of SARB contains detailed provisions on further aspects relating to the movement of funds and assets in South Africa to another country by non-residents and residents temporarily abroad. Due to the technicality and inherent complexity thereof, it is recommended that prospective emigrants retain the services of expert professional advisors to advise and assist them with this process.

3. Tax Residency

As alluded to above, the tax residency of a South African citizen plays an important part of the emigration process and the application of the Excon Regulations.

Seeing that the South African tax system is a residency based tax system (meaning a South African tax resident pays tax on their worldwide income), it is important to determine whether a prospective emigrant will remain liable to submit tax returns to the South African Revenue Services and to pay tax in South Africa, even if they ordinarily reside in another country. Depending on the facts and circumstances of a South African citizen living and working abroad, he/she may still be liable to comply with the South African tax laws.

To avoid the payment of “double tax” on the same income, most countries have entered into Double Taxation Agreements (“DTA”). The DTA between South Africa and the UK could assist a prospective emigrant to determine in which of the 2 countries they will be liable to pay tax on income earned while living abroad.

A South African individual that ceases to be a tax resident in South Africa should be aware of the potential tax implications of ceasing to be a South African tax resident. In terms of the Income Tax Act (1958), an individual who ceased to be a South African tax resident will be deemed to have disposed of all his/her assets (except immovable property) when he/she ceased to be a South African tax resident, which could result in tax implications (including capital gains tax being triggered on such deemed disposal). It is therefore strongly recommended that a prospective emigrant from South Africa obtains professional tax advice prior to emigrating to the UK.

4. Practical Considerations

Certification of Authenticity of Documentation

In many countries the verification of the authenticity of foreign documents is required for the document to be legally valid abroad. This is generally referred to as the “legalisation” of documents and comprise of a chain of certifications, by one or more authorities of the state where the document was issued and of the destination state.

In South Africa, for example, this process may take the following form:

The first authority, a Notary Public, certifies the issuer of the document;
The next authority could be the Registrar of the High Court, certifying the Notary Public;
The next authority could be the Department of Foreign Affairs, certifying the Registrar of the High Court; and
the last authority could be the Embassy of the destination state, certifying the Department of Foreign Affairs.

The Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents, also known as the “Apostille Convention”, is an international treaty drafted by the Hague Conference on Private International Law (HCCH). This Convention intended to simplify the procedure through which a document, issued in one of the contracting states, can be certified for legal purposes in the other contracting states. A certification under the Convention is called an “apostille”. Both South Africa and the United Kingdom are contracting states to the Apostille Convention.

A prospective emigrant from South Africa should therefore consider having all original and critically important documents issued in South Africa, apostilled before departing to the UK.

Issuing a Power of Attorney

To ensure that a natural person is still able to legally transact in South Africa while being abroad, it is strongly recommended that he/she provides a trusted person with a general- or special power of attorney, authorising such person to lawfully act for and on behalf of the natural person while they are residing abroad.

To ensure that the powers afforded to the appointed representative is not too wide or too restrictive (as the circumstances may require), it is suggested that a Notary Public is consulted to assist with the drafting of an appropriate power of attorney to suite the circumstances of the prospective emigrant and his/her affairs.

SST is a South African law firm with specialist legal departments, including Corporate and Commercial Law, Private Wealth and Estates, Conveyancing and Property as well as Labour Law. For more information on all our service offerings, please visit our website at www.sstlaw.co.za.

Should you require assistance with your proposed emigration from South Africa to the United Kingdom, our team of seasoned lawyers, assisted by independent specialist professional advisors (including tax experts and exchange control experts) will gladly assist you. Please contact Louis Stroebel on Lstroebel@sstlaw.co.za or Pieter Fourie on pieter@sstlaw.co.za in this regard.

(C) SOUTH AFRICAN TAX RESIDENCE CONSIDERATIONS

– Gerrie Coetzee | Snijder and Associates

1. South African tax residents:

Tax residency should not be confused with citizenship, nationality of permanent residency. Citizenship and tax residency can exist in different counties. A taxpayer can also have citizenship and tax residency in multiple countries. Tax residence is the taxpayers’ status with SARS for tax purposes.

South Africa has a residence-based tax system. South African tax residents are taxed on worldwide income (subject to certain exclusions) while South African tax non-residents are taxed on South African source income.

In South Africa an individual is a resident for tax purposes either by way of ordinarily residence or by way of physical presence. An individual deemed to be exclusively resident of another country in terms of a Double Tax Agreement is excluded from the definition of “resident”.

The term “ordinarily resident” is not clearly defined in the Act and determining whether or not an individual is an ordinarily resident for tax purposes must be done on a case-by-case basis where a number of factors are taken into consideration. An individual may be an ordinarily resident of South Africa where South Africa is the country to which that individual will “naturally and as a matter of course” return to from his or her wanderings. It could be described as the individuals’ usual / real or principal home.

A South African tax resident by way of physical presence must meet all three of the requirements of the physical presence test. In order to meet the requirements of the physical presence test, the individual must be physically present in South Africa for a period or periods exceeding –

91 days in total during the year of assessment under consideration;
91 days in total during each of the five years of assessment preceding the year of assessment under consideration; and
915 days in total during those five preceding years of assessment.

An individual who satisfies the physical presence test requirements, but is physically outside of South Africa for a continuous period of at least 330 full days, will not be regarded as a resident from the day on which that individual ceased to be physically present.

Double Taxation Agreements refer to agreements between two tax administrations of two countries enabling the administrations to eliminate double taxation and ensure that taxpayers are not unfairly taxed in both countries. Double Tax Agreements specify which country have the right to tax. There are different rules for different types of income. In certain scenarios only one country shall tax the income and in other scenarios both countries may tax, in the last mentioned scenario the country of which the taxpayer is a tax resident ma have certain tax credits available.

South African tax residents earning foreign income have the following exemption and / or credit available to them:

Foreign employment income – S10(1)(o) of The Income Tax Act, No. 58 of 1962

With effect from the year of assessment commencing on or after 01 March 2020 – Where the days requirements are met the first R1.25 million of foreign employment income earned by a South African tax resident will qualify for exemption. Foreign employment income earned over and above the R1.25 million will be taxed in South Africa. The normal tax tables for the relevant year of assessment will be applied.

Foreign income earned – s6quat of The Income Tax Act, No. 58 of 1962

This section allows a South African tax resident, where the requirements are met, to claim a credit against their South African taxes on foreign income earned for foreign taxes already paid on that income.

2. Ceasing South African tax residency:

Determining whether an individual ceased to be a South Africa tax resident is based on the manner in which the individual has been a tax resident of South Africa.

Where a taxpayer was an ordinarily tax resident, it is a factual enquiry if the individuals’ subjective intention is to cease to be an ordinarily resident and no longer regard South Africa as their real / permanent / usual home. This will have to be supported by various factors and documentation.

Where an individual is resident by virtue of the physical presence test, the individual will cease to be a resident when the individual no longer complies with the days requirements.

An individual who is an ordinarily tax resident can thus not cease South African tax residency by application of the physical presence test.

Section 9H of The Income Tax Act, No. 58 of 1962 – “Change of residence, ceasing to be controlled foreign company or becoming headquarter company” has to be considered when breaking South African tax residency. There will be a deemed disposal of worldwide assets, excluding immovable property situated in South Africa, for capital gains tax purposes (“exit tax”).

3. South African tax non-residency application:

When a taxpayer ceases to be a South African tax resident SARS should be informed. The taxpayer should inform SARS through the Registration, Amendments and Verification Form (RAV01) on e-filing by means of capturing the date on which the taxpayer ceased to be a tax resident under the Income Tax Liability Details section.

The documentation required upon informing SARS includes the Declaration form, indicating the basis of qualification, that must be completed, signed and submitted; a letter of motivation setting out the facts and circumstances in detail to support the disclosure; a copy of the taxpayers’ passport / travel diary; and the specific documents required based on the qualifying basis.

South African tax non-residency confirmation letter:

The SARS non-resident tax status confirmation letter confirms that the individual taxpayer has ceased to be a South African tax resident and states the date that South African tax residency was ceased.

4. Double Tax Agreements:

As mentioned previously, Double Taxation Agreements refer to agreements between two tax administrations of two countries.

The type of income has to be considered in order to establish which country has the right to tax or if both may tax.

Our dedicated team of taxation specialists at the Snijder Group (SWS Taxation Consulting), have successfully assisted clients during the past few years with various foreign taxation enquiries and matters and have also successfully completed multiple South African tax non-residencies applications. In an ever-changing world of taxation legislation and related requirements, our team is your trusted and effective solution.

(D) MOVING TO THE UK – TAX AND RESIDENCY CONSIDERATIONS AN OVERVIEW OF THE UK RESIDENCY RULES
– David Gibbs – Alliotts LLP

(1) The UK tax residence is important in determining the extent to which an individual is liable for UK tax. In general, UK residents are liable for UK tax on their worldwide income or gains, whereas non-UK residents are only liable for UK tax on certain UK-based sources of income or gains.

Statutory Residence Test

In the UK, the tax year is a period of 12 months running from 6 April to 5 April. An individual’s tax residency position is established by going through the Statutory Residence Test in order.

Automatic UK Test 1 – this test requires the individual to spend at least 183 days of the tax year in the UK. If this test is not met, they then need to move on to the next one.

Automatic Overseas Test 1 – note that this test is not relevant to new ‘arrivers’ i.e. individuals who are not UK resident in any of the three tax year immediately preceding the relevant tax year.

Automatic Overseas Test 2 – under this test the individual is not UK resident if they spend fewer than 46 days in the UK during the tax year.

Automatic Overseas Test 3 – again this test is not relevant to new arrivers. If the automatic overseas test 2 is not met by the individual, they need to move on to the next one.

Automatic UK Test 2 – this test is relevant when the individual has a UK home for at least 91 consecutive days, at least 30 days of which are in the relevant tax year. However, if they also own a home overseas during that 91-day period, this test will become complicated to apply and so advice should be sought here.

Automatic UK Test 3 – note that this test applies to new arrivers coming to the UK to work on a full-time basis with no significant break in employment.

In most cases, the individual’s residency status can be established by one of the above tests. However, where none of them is met, the individual will need to consider their connections to the UK (known as ‘ties’), and determine whether their ties, taken together with the number of days they spend in the UK, are sufficient enough to make them become UK resident for the relevant tax year. The ties to consider are:-

– UK resident family

– UK accommodation

– Extent of UK work

– 90-day presence in the UK in any of the preceding two tax years

– Country tie

Split year treatment

When the individual arrives in the UK part way through a UK tax year, the tax year may be split into two parts:-

– A ‘UK part’ for which the individual is taxed as UK resident; and

– An ‘overseas part’ for which they are taxed as non-UK resident.

Any foreign income or gains arising during the ‘overseas part’ of the tax year will not be subject to UK tax. The rules in relation to the split year treatment can be complicated to apply and so advice should be sought here.

1. How to determine domicile status for UK tax purposes

Generally, a non-dom could become domiciled in the UK by the following two ways:-

1. Domicile of choice

There is no formal process for agreeing the domicile status with HMRC. A domicile of choice is an inference that the law makes from the facts.
An individual will effectively acquire a domicile of choice where they:
- are physically resident in the UK; and
- show their intention to make UK as their permanent home for the rest of their lives.

2. Long-term residence i.e. 15 out of the preceding 20 years

The individual can change their nationality without it affecting their domicile, provided they still have a connection, i.e. properties, social commitments or business interests with the jurisdiction in which they have a domicile of origin.

The burden of proving a change in domicile lies with whoever asserts the change i.e. the individual themselves or the UK tax authorities. As for the individual, they have to show clearly and convincingly that they retain their domicile of origin by not severing connection with their original country.

2. An introduction to the UK remittance basis tax regime

The non-dom UK resident can elect to be taxed on the remittance basis, under which their unremitted offshore income or gains can be effectively sheltered from UK tax. Note that the definition of a remittance, for UK tax purposes, is wide ranging and so advice may well be acquired here.

The consequence of claiming the remittance basis is that the individual will lose their entitlement to the UK personal allowance (currently £12,570) and capital gains annual exemption (currently £6,000) for the tax year in which the remittance basis is claimed.

A decision as to whether to make a claim of the remittance basis can be made on a year-by-year basis. The claim is usually made via the individual’s UK self-assessment tax return.

Notably, the remittance basis can be claimed free of charge for the first 7 tax years of residence. While from the 8 th year of residence, if the individual wishes to continue living in the UK and claiming the remittance basis, they will be required to pay an annual remittance basis charge, which is £30,000 per tax year for the individual who has been UK resident for at least 7 of the previous 9 tax years, and £60,000 per tax year for those who have been resident for at least 12 of the previous 14 tax years.

3. Planning for the remittance basis – a brief overview on pre-entry planning

Offshore monies do not trigger UK tax liabilities when they are accumulated before the commencement of the individual’s UK residence, which are considered as ‘clean capital’. The account containing clean capital must be appropriately ringfenced so that it will not be mixed with the individual’s offshore income or gains arising after they become UK resident.

More importantly, please ensure that there will not be any interest accrued into that clean capital account, otherwise a ‘mixed fund’ i.e. the account containing a mixture of clean capital and offshore income will be created. Where a remittance is made from the mixed fund, the UK tax legislation stipulates specific ordering rules for the purpose of matching the remittance with monies comprised within that account. The ‘mixed fund’ rules are complicated to apply and so advice should be sought.

Alliotts LLP – How we can help

We have a team of experienced advisors who can help plan for a move to the UK prior to arrival, and then register an individual with HMRC to allow for reporting and filing of UK tax liabilities.

In particular we will meet before coming to the UK, usually a video meeting where we can gather the facts, key dates and earnings likely to arise when coming to the UK. This is an initial no obligation meeting, after which we will set out the scope of our advice together with our fee schedule.

We will advise on clean capital as noted above, the funds required to be set aside for purchases of key assets, usually houses, and then any method of ring fencing overseas income.

We can also advise on UK employment income being subject to tax, application of the non domicile tax rules and whether relevant to apply for the remittance basis. This may also consider split employment contracts if any work is still performed overseas and the overseas workday relief.

We will hold an arrival meeting to confirm the facts and apply for a tax reference number form HMRC. After that we can support with annual tax filings and general compliance.

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