Why does the new UK tax environment make life insurance in Luxembourg even more attractive?

François-Xavier Jeanmart: The British government has just confirmed the end of the advantageous tax status of 'Non-Domiciliates'. This measure, which was announced by the Labour government last September, will come into force on 6 April 2025.

The "Non-Dom" regime will be replaced by a new regime known as "FIG" ("Foreign Income and Gains"), allowing foreign income and gains to be exempt for a period of 4 years, provided that they have not been resident for tax purposes in the United Kingdom for the 10 years preceding this period. Non-Doms who are already present in the UK will also be able to benefit from the new "FIG" exemption scheme within the 4-year tax residence limit set out above. The UK government has also introduced compensatory tax measures to mitigate the undesirable effects of the disappearance of the Non-Dom regime.

A new residence-based inheritance tax regime will come into force on 6 April. Non-UK assets held abroad will be subject to inheritance tax after only 10 out of the last 20 years of residence in the UK. It should also be noted that anyone leaving the UK after 10 years' residence will remain subject to UK inheritance tax for a "tax tail" period of at least 3 years. This extended liability to UK inheritance tax will depend on the number of years spent in the UK beyond the 10 years of residence, up to a maximum of 10 years.

With the scheduled end of the "Non-Dom" regime, Luxembourg life insurance policies are emerging as a first-choice alternative solution and thus represent a genuine long-term alternative to remittance, whereas the new "FIG" regime is set to last only 4 years.

In addition, thanks to Luxembourg regulations authorising payment of the premium by contribution in kind, life insurance enables customers to avoid disinvestment of assets. Non-Doms wishing to purge unrealised capital gains from their assets before 6 April 2025, for example, can fund a Luxembourg life insurance policy by transferring an existing portfolio.

This solution also enables them to maintain their lifestyle abroad thanks to the favourable regime for partial surrenders, capped at 5% of the premiums paid into the policy each year. For those who have set up an "Excluded Property Trust" to mitigate UK inheritance tax, the purchase of a Luxembourg life insurance policy by the trustee would enable them to avoid immediate taxation of income and capital gains on the assets held in the trust.

In practical terms, what does Cardif Lux Vie offer UK-resident customers?

Reuben Everett: First of all, I'd like to point out that the strength of Luxembourg life insurance solutions lies in their ability to meet a variety of needs in a single package. Financial management, taxation, portability, inheritance, protection... these are all assets that appeal to the clients and partners of wealthy clients operating in an international context. The strength of Luxembourg life insurance lies in its ability to offer 'made-to-measure' solutions tailored to unique client groups. Cases are often highly complex and need to be explained, simulated and priced. In this area, Cardif Lux Vie has built up unrivalled expertise over the years with multilingual, multidisciplinary teams (legal, wealth engineering, financial engineering, asset management, etc.).

For customers resident in the United Kingdom, Cardif Lux Vie is in regular contact with the teams within banks and financial institutions dedicated to supporting these customers, and can offer them dedicated solutions: a wide choice of investment vehicles (with a range of sophisticated assets that are particularly popular with this clientele), a capitalisation envelope, tax exemption (up to 5% of the initial premium can be withdrawn without tax consequences each year), segmentation, estate planning ('potentially exempt transfer'), gift with control, pledging, etc.

Last but not least, Luxembourg life insurance is portable. So, if they leave the UK, Non-Doms have access to a capitalisation solution that is passportable to many countries in Europe and even elsewhere. Cardif Lux Vie currently offers one of the widest ranges of products on the market, with compliant policies for 6 European Union countries (France, Luxembourg, Belgium, Italy, Spain and Portugal) and 10 non-EEA countries (China, United Kingdom, Hong Kong, Mauritius, Israel, Mexico, Monaco, San Barthelemy, San Marino and Singapore).

What makes you different?

Reuben Everett: I think our added value is first and foremost the strength of our business model: we can rely on a large, solid group and a high-quality shareholder base.

What also sets us apart is the fact that we can respond to a very wide range of situations, in more than fifteen countries - it's a big playing field! Wherever we offer our products and services, we draw on cutting-edge tax, legal and wealth management expertise. Our leitmotiv on a daily basis is the support and availability we offer our partners. This spirit of partnership guides our choices, our strategy and our priorities.

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