Retire to the Isle of Man?

[jim555]

Always looking for interesting geo arbitrage so Isle of Man came into sight.  I'm a US/UK dual national so I have right of abode since IOM is part of the Common Travel Area with Britain, Ireland, the Channel Islands.  Working requires a permit, but I am retired so this isn't an issue for me.

Advantages over the UK, is a low-tax economy with no capital gains tax, wealth tax, stamp duty, or inheritance tax; and a top rate of income tax of 20%. A tax cap is in force: the maximum amount of tax payable by an individual is £125,000.  Reciprocal NHS coverage with the UK so no need for health insurance for people ordinarily resident.

I'm wondering if anyone else has considered IOM as a retirement location?

 

[Playing with Fire UK]

I have friends who grew up on IOM - property is eye-wateringly expensive. The island lifestyle wouldn't suit me personally.

[RobERE]

Yes, I'm considering it at the moment. We were looking at moving from 20 miles outside London to Cornwall. IoM house prices are comparable with Cornwall and definitely cheaper than Kent. DW is not convinced because it's a backwater and there may be little in the way of cultural stimulation. Also, the weather. It's wet and windy and average temperatures are a degree or so lower than Newquay all year round. We discussed it this evening and her take was 'If you're bored in Cornwall you can jump in the car and go to Plymouth or Exeter or anywhere in the UK easily. If you're bored in IoM you need to take a flight to Liverpool/Manchester/London or a ferry to Heysham/Liverpool which isn't as easy and is more expensive. My reply was that with lower taxes, we could afford the higher travel costs. We have agreed to make an exploratory trip as soon as IoM government is allowing visitors again.

[Manchester]

I'd be surprised if the tax savings weren't offset by the higher cost of living.  Usually with the Channel Islands and the IOM house prices are way way way more expensive and your shopping bills will be higher etc.

[fishbee]

The current tax regime in the UK is actually pretty friendly to people that have already retired: there is no wealth tax, and if your money is in wrappers like SIPPs and ISAs, you can minimise your capital gains/"income" taxes. (This could of course change in the future!)

What would be advantageous wrt the Isle of Man is being a resident there *while* you accumulate your retirement pot. As people have mentioned, the income taxes are pretty low, even without tax wrappers. On the other hand, unless you're in wealth management or tax accounting, here might not be many jobs earning a high salary for you take advantage of that. So you would probably be looking at being a resident on the island while working remotely for a company elsewhere.

[RobERE]

The current tax regime in the UK is actually pretty friendly to people that have already retired: there is no wealth tax, and if your money is in wrappers like SIPPs and ISAs, you can minimise your capital gains/"income" taxes. (This could of course change in the future!)

What would be advantageous wrt the Isle of Man is being a resident there *while* you accumulate your retirement pot. As people have mentioned, the income taxes are pretty low, even without tax wrappers. On the other hand, unless you're in wealth management or tax accounting, here might not be many jobs earning a high salary for you take advantage of that. So you would probably be looking at being a resident on the island while working remotely for a company elsewhere.

What the Isle of Man offers uniquely is freedom from inheritance tax. Whilst it's true that SIPPs are exempt from UK IHT, ISAs aren't. IoM income tax is certainly lower and more advantageous than UK's. Some people comment that it is offset by higher cost of living but that depends on spending choices.

[cerat0n1a]

I really like the Isle of Man. I ran from one end of the island to the other last summer and it was looking beautiful. I'm surprised by the comments about it being expensive - maybe compared to Cornwall or the North of England it is, but not compared to quite a lot of the south east. You can certainly buy a nice 2-bed semi for £250k which would be completely impossible here. It's a lovely place to go for a holiday, particularly if you like old trains and transport.

It's largely frost-free, probably more going on culturally than Cornwall, to be perfectly honest, unless things have changed since I lived down there in the early 90s. The east side of the island is in the rain-shadow of Snaefell, so there is fair amount of variation in climate across the island. If you don't like the weather where you are, you can usually drive a short distance and get something different. It's all windy though.

The vast bulk of the population is local and is not associated with financial services shenanigans and although it does feel a bit like going back in time, and it's pretty conservative, crime is low and I don't think there's much ill-feeling to non-locals

My possibly false impression is that it attracts people who've made enough money that they want to hide from the taxman, but not enough that they can afford to go to Monaco or somewhere nicer, so it's great if your idea of retirement is playing golf with your fellow scrap-metal merchants and car dealership owners. I guess if you're sufficiently rich to need to live there, the extra cost of travelling anywhere else, and the expensive gas & electricity don't really factor.

The presence of motorbikes travelling extremely fast on the island's roads for a good part of the year would be enough to put me off wanting to live there, tbh. No speed limits on many roads, and a lot of villages and houses have crash barriers on every corner.

[RobERE]

@cerat0n1a thanks for your positive comments, which tally with my perceptions from previous visits. I hadn't picked up the granular detail about scrap metal merchants though! :)

Interestingly, the cost of return flights from Isle of Man to London City is less than the train fare from Penzance, so it's no more costly than living in Cornwall for escaping 'to the mainland'.

Going back in time, conservative, low crime and no ill-feeling to 'comeovers' are all positives.

[Borgo Panigale]

Depending on how much money you have, Canton Schwyz in Switzerland might be a choice.

Prettier than IOM and you can also negotiate your own tax level.

[RobERE]

Depending on how much money you have, Canton Schwyz in Switzerland might be a choice.

Prettier than IOM and you can also negotiate your own tax level.

Many thanks for your suggestion. I'm smiling because my accountant once suggested selling up and moving to Switzerland as the best way of reducing my tax liabilities (or stop working!). Unfortunately, he didn't know enough to give any pointers and it didn't fit with our life at that time. I did a little research into housing costs in Zug (which I thought was the most tax-friendly canton) recently. But that was more costly than IOM like-for-like. What would you say is the NW threshold above which Canton Schwyz is attractive?

[Borgo Panigale]

For retirees, I think the old adage was CHF2m in invested assets made sense, given the increased cost of living/healthcare.  The appeal for a lot of people is the very low inheritance tax which makes tax planning a lot less of a problem.  The double tax agreement with the UK is fairly comprehensive so no real worries there.
 
Just a note, the options for accelerated citizenship are now much less evident unless you are bringing in CHF10m or more in direct business investment.  So, if Brexit flexibility is important to you then you may want to consider that and if you want to be on that side of the Rostigraben, then expect to be renting for a while due to residency constraints.

Our house is in Canton Vaud where taxes are not as attractive but I set up my business here 16 years ago and bought a repossession doer-upper in 2006, so I've benefited from the income tax regime and pension provision.  I've just bought the 5ha of land next to the house and am restoring an old orchard and smallholding as a hobby business for my impending retirement.  I had a UK and a Swiss consultancy business, but we took the view post 2016 that our family future was not in the UK so we have been transferring assets here over the last few years, my wife starts a new job here in September and have just received an offer on our UK house.

Having spent many Junes at the IOM GP TT and time in CH I think I know where I'd retire. ;-)

[RobERE]

@Borgo Panigale, many thanks for your comprehensive response. You did really well to make your move back in 2006. The asset requirement isn't too onerous. However, there is a significant differential in property values and rents between the two locations.

TT weeks are to be avoided. If we move to IOM we will probably be spending the best part 6 months/year off the island (certainly whilst we are fit and mobile) and after the novelty of our first TT, I'm sure those are fortnights we would plan to be away! Best wishes for your retirement!