UK's New Tax Grab: Is Permanent Residency Still Worth It for BNO Holders?

For most Hong Kong BNO holders in the UK, "permanent residency" is the ultimate goal, making the dreaded "10+1" visa extension rule a constant source of anxiety.

But what if getting what you want isn't all it's cracked up to be? It turns out that permanent residency comes with a sting in its tail, a cost so significant that some are running the numbers and deciding to pack it in and return to Hong Kong.

A friend in the UK broke it down for me: as of this April, the UK government has flipped the script on its tax policy. Once you become a "permanent resident," any future income you earn overseas—including from Hong Kong—gets taxed by the UK.

The price of "permanent residency": Hong Kong BNO holders face UK taxes on all future overseas income, forcing some to abandon their applications.

Thinking of heading back to Hong Kong or working elsewhere? You’ll be sharing a slice of your paycheck with the British government. The big question is whether this "tax debt" is a price worth paying for residency, and for a number of people, the answer is "no."

A Cash-Strapped UK Government Comes Knocking

Let's be blunt: the new Labour government's biggest headache is that it's broke. With spending far outstripping revenue, the national coffers are all but empty, forcing them to scramble for cash by any means necessary. It’s no surprise that corporations and the ultra-rich are feeling the squeeze, but now the middle class is squarely in the crosshairs of this tax grab.

Previously, the UK was fairly relaxed about overseas income. "Non-domiciled" residents, a category that includes Hong Kong BNO holders, didn't have to pay tax on foreign earnings as long as the money wasn't brought into the UK. But in a desperate move to penny-pinch, the Labour government threw that policy out the window this April, making all foreign income taxable.

My friend in the UK spelled it out clearly: if a Hong Kong BNO holder leaves the UK before becoming a "permanent resident"—whether to return to Hong Kong or move elsewhere—they're off the hook for this tax. But the moment that residency application is approved, the game changes. They are then expected to fulfill their civic duties, which now includes handing over a chunk of their Hong Kong earnings to the UK taxman.

The High-Earner's Dilemma

Of course, as my friend pointed out, for a BNO family that has moved to the UK for good with no plans to work in Hong Kong again, this tax change is a non-issue. But it's a completely different story for high-income professionals.

Think about the BNO families without young kids in the UK school system, who still have lucrative career opportunities waiting for them back in Hong Kong. For them, the threat of crippling UK taxes looms large, and the fear of the government taking a massive slice of their earnings is making them think twice about even applying for permanent residency.

He then gave me a real-world example: a single person from Hong Kong working in finance, earning a solid upper-middle-class income. His company treats him well, and after several years in the UK, he's eligible for "permanent residency" next year. But he's on the fence, and frankly, leaning towards walking away. Why? Because Hong Kong's financial sector is roaring back to life, with foreign firms either setting up shop or expanding their operations. With his experience, job opportunities are plentiful back home. If he gets UK residency, he'll be stuck paying taxes in two places, taking a huge hit to his income. He's done the math, and the trade-off just isn't worth it.

A finance professional in the UK crunched the numbers on taxes and decided to head back to Hong Kong instead of staying.

The Brutal Math of UK Taxes

And my friend confirmed his math is spot on. Under the UK's tax system, an annual income over a certain threshold, say HK$500,000, gets hit with a staggering 40% income tax. Compare that to Hong Kong's gentle 15%, the difference is massive. For a mid-level professional in finance, an annual salary of HK$1 million is hardly unusual. Having 40% of that "bitten off" by the UK government is more than just painful—it's a deal-breaker. Paying that kind of price for "permanent residency" simply doesn't add up.

Four years ago, we saw the peak of BNO migration to the UK. Assuming media reports are correct and the "5+1" pathway holds, the first wave of these BNO holders will be eligible to apply for "permanent residency" next year. My friend predicts this is when the reality will sink in, and many will start doing the same painful calculations. This is particularly true for people like the finance professional in his example. After weighing the pros and cons, they might just decide to scrap the application altogether to dodge the bullet of double taxation and avoid being bled dry by the UK government.

A Smart Move or a Missed Opportunity?

After hearing my friend's story, I have to say, I get it. It makes perfect sense to crunch the numbers and weigh the costs before diving into a "permanent residency" application. With Hong Kong offering a golden opportunity for career development right now, making a smart, calculated decision is crucial.

And from Hong Kong's perspective, the return of more talented professionals from overseas? That's unequivocally a huge win.

Lai Ting-yiu

What Say You?

** The blog article is the sole responsibility of the author and does not represent the position of our company. **

Long after the Black Riots ended, key pan-democrats who stuck around Hong Kong played it safe—low profile, out of headlines. But these same figures kept cozy ties with foreign consular powerbrokers, facts anyone can see from repeated public invitations. On this occasion, Anson Chan, Emily Lau, Alan Leong, and Kenneth Leung showed up as VIPs at the British Consulate. The warmth? It’s no mystery, if you know their backstory.

Reunion at the Consulate: Anson Chan, Emily Lau, Alan Leong, and Kenneth Leung pose at the British King’s birthday luncheon

Raising Questions, Finding Evidence

A friend dropped a telling remark after seeing the photo: British decision-makers groomed Anson Chan for power even before the Handover, and those links never really faded. The relationship is unusually tight—two behind-the-scenes stories make that fact plain. Must be why the British still roll out the red carpet for Chan.

After quitting the government in 2001, Chan inched closer to the opposition and even won a Legislative Council seat. For years, US and UK consuls wined and dined her—plenty of evidence in social media posts and diplomatic cables—to allegedly “discuss strategies” for Hong Kong. It’s not gossip; it’s documented pattern.

When the 2019 unrest exploded, Anson Chan took sides on the so-called “international front.” Prosecutors stated in open court that, behind the scenes, Jimmy Lai directed “Stand With Hong Kong” (SWHK)—led by Andy Chan, Andy Li, and Finn Lau—to carry out international lobbying and publicity campaigns, spending large sums of money.

Court documents further show that Anson Chan wasn’t a bystander: back in 2019, she brought Andy Li to a luncheon with then British Consul Andrew Heyn. Martin Lee, Dennis Kwok, and Charles Mok were also there. The prosecution records are clear—Chan leveraged her foreign contacts to make connections for SWHK, all with Jimmy Lai’s shadow looming in the background.

2019, Behind Closed Doors: Anson Chan sits down with Consul Andrew Heyn

Not Just a “Chat Over Tea”

There’s more. During anti-extradition protests, surveillance and eyewitnesses caught Anson Chan on August 13, 2019, holding secret discussions at a hotel with Andrew Heyn and his aide—documents in hand. That was no idle chat. The British Consulate’s involvement raises eyebrows, especially as staff like Simon Cheng were repeatedly spotted at protest sites. Cheng ran off to the UK, claimed political asylum, and neatly sidestepped questions about his activities.

With the national security law approaching, Chan made a quick exit from politics—claiming “retirement.” She kept out of jail, but her dealings with foreign diplomats never stopped. When the new US Consul General Julie Eadeh met her right on arrival, Beijing protested—an incident widely reported by state outlets and foreign press alike. Now, Chan’s red carpet invite to the British King’s birthday party again stirs scrutiny.

The rest of the guest list tells its own story. Emily Lau, Alan Leong, and Kenneth Leung all made appearances. Notably missing: Martin Lee, once the darling of the British. No explanation given—just another twist in an old game. For the establishment camp, only Deputy Chief Secretary Warner Cheuk attended, showing that official ties with the British remain careful and distant.

Looking at these staged reunion snapshots, my friend shakes his head—those glory days are long past. Wise up, he says: the era is over, and flirting with foreign consulates only ended up undermining Hong Kong’s stability. It’s time for these figures to accept reality and leave wishful thinking in the past.