Financial Planning in Hong Kong: A Guide for Expats and International Investors

Hong Kong's tax regime is one of the most straightforward and efficient in the world for high-net-worth individuals. Its territorial system taxes only income arising in Hong Kong; there is no capital gains tax, no inheritance or estate duty (abolished in 2006), no VAT or GST, and no tax on dividends. The standard rate cap of 15% and maximum progressive rate of 17% on Salaries Tax compare favourably with almost every major global financial centre.

The past several years have introduced complexity of a different kind. Political changes following 2019 and 2020 have reshaped the geopolitical context, altered the legal landscape (the National Security Law), and prompted some internationally mobile individuals and businesses to reassess their Hong Kong exposure. At the same time, the city remains a world-class financial centre, retains its currency peg to the USD, and continues to offer unparalleled access to Mainland Chinese markets for international investors.

For internationally mobile HNW individuals, Hong Kong warrants serious consideration — with eyes fully open to the context.

This guide is for general information only. Hong Kong tax and regulatory rules are subject to change. Always obtain professional advice from Hong Kong and UK-qualified advisers before making decisions.

Tax Residency Rules

Hong Kong does not have a formal "tax residency" concept in the OECD sense. Its territorial tax system applies to income sourced in Hong Kong, regardless of the taxpayer's residence status. This is Hong Kong's defining tax characteristic:

• An individual who is ordinarily resident in Hong Kong and earns income from employment exercised entirely outside Hong Kong is not liable to Hong Kong Salaries Tax on that income.
• An individual who is not resident in Hong Kong but performs duties of employment in Hong Kong is liable to Salaries Tax on the income attributable to those Hong Kong duties.

Salaries Tax is levied on assessable income from employment (salaries, wages, directors' fees, bonuses, and benefits arising in or derived from Hong Kong). The tax is assessed on the net chargeable income after allowances.

Profits Tax applies to businesses and persons carrying on a trade, profession, or business in Hong Kong with profits arising in or derived from Hong Kong. The standard rate is 16.5% for corporations and 15% for unincorporated businesses (with a two-tiered regime: 8.25%/7.5% on the first HKD 2 million of profits for qualifying entities).

Property Tax of 15% applies to rental income from Hong Kong property.

Salaries Tax Rates

Hong Kong Salaries Tax is calculated under the more favourable of two methods:

Progressive rates (after allowances):

• Up to HKD 50,000: 2%
• HKD 50,001–100,000: 6%
• HKD 100,001–150,000: 10%
• HKD 150,001–200,000: 14%
• Above HKD 200,000: 17%

Standard Rate: A flat rate of 15% on net income (before personal allowances). If this produces a lower liability than the progressive method, it applies instead.

Personal allowances are relatively generous: the basic allowance for 2025/26 is HKD 132,000; married persons' allowance, child allowances, dependent parent allowances, and self-education expenses are additional deductions.

No CGT, No IHT, No VAT

The absence of capital gains tax, estate duty, and indirect consumption tax (VAT/GST) fundamentally differentiates Hong Kong's tax environment from most developed economies.

• No capital gains tax: gains on shares, bonds, property, and other assets are not taxed, regardless of size or holding period.
• No inheritance/estate duty: abolished in February 2006. Transfers of Hong Kong-sited assets at death are not subject to duty; estate planning from an HK tax perspective is largely unencumbered by local tax costs.
• No VAT/GST: consumer prices are not inflated by indirect tax; business compliance costs are lower.

These features make Hong Kong a compelling accumulation and distribution vehicle for HNW investors — provided the income generating those assets is not Hong Kong-source employment income subject to Salaries Tax.

Hong Kong Investment Entry Scheme

On 1 March 2024, Hong Kong relaunched the Capital Investment Entrant Scheme (CIES) — commonly referred to as the Investment Entry Scheme — reviving the earlier scheme that had been suspended in 2015. The revised scheme requires applicants to invest a minimum of HKD 30 million (roughly £3 million at mid-2026 rates) in qualifying Hong Kong assets.

Qualifying investments include:

• Hong Kong equities listed on the HKEx
• Hong Kong dollar debt securities
• Eligible collective investment schemes
• Eligible Hong Kong investment-linked insurance schemes

Of the HKD 30 million total, at least HKD 27 million must be invested in permissible assets (with non-residential real estate counting only up to HKD 10 million), and HKD 3 million must be placed in the dedicated "CIES Investment Portfolio" managed by the Hong Kong Investment Corporation Limited.

Successful applicants receive a two-year entry permit, renewable on demonstration that the investment is maintained. After seven years of ordinary residence, applicants may apply for right of abode. The scheme does not require the investor to be employed in Hong Kong, making it accessible to retirees and passive investors.

Property Ownership

Foreign nationals may purchase property in Hong Kong without restriction. Stamp duty is the primary transactional cost:

• Buyer's Stamp Duty (BSD): historically 15% for foreign buyers; changes should be confirmed with current rules as the HK government has periodically adjusted property cooling measures
• Ad Valorem Stamp Duty (AVD): scale rates applicable to all buyers based on consideration
• Special Stamp Duty (SSD): applies if the property is resold within 24 months

Annual property tax (15% on net assessable value of rental income) applies to investment properties. There is no recurring annual property value or wealth tax.

The Hong Kong residential market is one of the world's most expensive per square metre; HKD 10 million buys a modest apartment in most districts. Prime residential on The Peak, Repulse Bay, and Kowloon Tong commands substantially more. Serviced apartments are widely available as short-term solutions for newly arrived expatriates.

Banking

Hong Kong is a world-class international banking centre. Major institutions include:

• HSBC and its subsidiary Hang Seng Bank (the dominant retail banks; HSBC has its global HQ heritage here)
• Bank of China (Hong Kong)
• Standard Chartered Hong Kong
• Citibank Hong Kong
• DBS Hong Kong, UOB, OCBC

Private banking is comprehensively served by the above plus the full range of international private banks: Julius Baer, UBS, Credit Suisse successor entities, JP Morgan Private Bank, Goldman Sachs Wealth Management, and others.

Account opening has become somewhat more complex in the post-2020 environment; some international banks have introduced enhanced due diligence requirements for Hong Kong accounts. However, for well-documented HNW clients, access to private banking relationships remains straightforward.

The Hong Kong dollar (HKD) is pegged to the USD under a currency board arrangement maintained since 1983 (USD 1 = HKD 7.75–7.85 band). This peg has been resilient through many economic cycles and provides exchange rate certainty for USD-denominated investors.

Post-2020 Political and Legal Context

The National Security Law (NSL) enacted in June 2020 significantly changed Hong Kong's legal and political environment. The NSL created new criminal offences (secession, subversion, terrorism, collusion with foreign forces) with provisions extending extraterritorially. Some international law firms, financial institutions, and professionals have adapted their risk frameworks accordingly; certain categories of political activity that were historically lawful in Hong Kong are no longer so.

From a purely financial planning perspective, the NSL's direct implications for law-abiding HNW investors and residents are limited. The legal system for commercial and civil matters — rooted in English common law and administered by independent courts, including continuing access to the UK Privy Council for certain matters — remains intact and respected internationally.

Geopolitical risk — the possibility of deterioration in US-China or broader Western-China relations affecting Hong Kong's status, financial market access, or the USD peg — is a scenario that should be factored into long-term planning horizons. Concentration of assets solely in Hong Kong is inadvisable for this reason; maintaining diversified international holdings is prudent.

UK–Hong Kong Tax Treaty

The UK and Hong Kong have a Comprehensive Avoidance of Double Taxation Agreement (CDTA) in force (signed 2010). Key provisions:

• Dividends: Hong Kong levies no withholding tax on dividends; the treaty caps the rate at 15% in the limited case of certain property-investment-vehicle (REIT-type) distributions, with an exception for pension schemes
• Interest: Hong Kong levies no withholding tax on interest
• Royalties: capped at 3% under the treaty
• Capital gains: generally residence-based; Hong Kong taxes no capital gains, so this is not relevant for HK-resident individuals
• Employment income: generally taxable in the state where duties are exercised

Pension Considerations for UK Expats

UK state pension accrual depends on NI contributions; voluntary contributions (Class 2 or 3) should be maintained during Hong Kong residence. Hong Kong operates the Mandatory Provident Fund (MPF) system — a defined contribution scheme mandatory for employed persons. Both employer and employee contribute 5% of relevant income (minimum and maximum contribution levels apply). For expatriates on short-term postings with foreign employment contracts, MPF exemptions may be available; advice is needed.

UK pension income drawn whilst resident in Hong Kong is subject to Hong Kong Salaries Tax only if it is Hong Kong-sourced — which it typically is not for a UK-origin pension. The CDTA allocates taxing rights on UK government pensions to the UK and on private pensions to the residence state; if Hong Kong treats pension income as foreign-sourced (and therefore outside the Salaries Tax net under territorial principles), there may be no HK tax on UK pension income, but this should be confirmed with a Hong Kong tax adviser.

Practical Expat Community Observations

Hong Kong's expatriate community is one of the most established in Asia, centred on financial services, law, trading, and regional corporate headquarters. Mid-Levels (convenient to Central), The Peak (luxury; impractical for daily commute without car), Happy Valley, and South Side (Stanley, Repulse Bay, Shouson Hill) are popular residential areas for families with school-age children.

International schooling is well provided: English Schools Foundation, German Swiss International School, French International School, Canadian International School, and numerous other options across the spectrum. ESF schools are subsided for certain categories but highly oversubscribed; places must be secured well in advance.

Healthcare is excellent: both the public (Hospital Authority) and private (Gleneagles, Hong Kong Sanatorium, Matilda) systems are of high quality. International health insurance covering Hong Kong and global access is advisable.

How Global Investments Can Help

We advise HNW individuals and families with Hong Kong connections, helping to optimise UK pension and investment structures for the Hong Kong tax environment, assess the CIES investment entry scheme, review geopolitical risk within a global portfolio context, and coordinate with Hong Kong legal and tax counsel. Contact us to discuss your situation in confidence.