8 figure crypto exit strategy - UK edition

[Silvio]

An update: I finished my employment in the UK and have moved to Jersey. Hopefully the following should be useful if anyone is thinking of doing something similar in the future.

Then if none of those work then I'll look to the Swiss/Lichtenstein banks:

- SEBA
- Swissquote
- Dukacospy
- Bank Frick

If none of those work I'll be forced to use my dormant UK bank account rarely for a few transfers. This would be more likely to result in a tax investigation when I get these deposits but pay no UK tax that year and I'll be more likely to have to go through the time consuming and stressful procedure of an HMRC audit. Or try and use my Revolut account (I've had this since 2017 and have moved 6 figure crypto exchange transfers through it but I think chances are it gets locked. I'm actually friends with a couple of senior people in the company so could be worth speaking to them).

Ideally I would use one of these banks for transactions, keeping the minimum balance and transferring any money after crypto sales to IBKR to buy stocks and hold them where it's cheaper. However I think a lot of these places want you to keep most of your money/investments there to make it worth it for them. Again annoying but I'm willing to do it if it means they open the account.

If anyone knows some other banks in Jersey or outside I've missed that would be worth trying please let me know.

Good luck!

Have you thought of using EMIs for sending\receiving from crypto exchanges and them sending from\to the normal bank accounts?
This way you don't directly send crypto to banks that don't like crypto, and raise no flags.

It's common to have transactional bank accounts just for wires to\from 3rd parties and then solid bank accounts for storing wealth\investments, which usually hate 3rd-party wires.

 

[philthaiven]

Good luck!

Have you thought of using EMIs for sending\receiving from crypto exchanges and them sending from\to the normal bank accounts?
This way you don't directly send crypto to banks that don't like crypto, and raise no flags.

It's common to have transactional bank accounts just for wires to\from 3rd parties and then solid bank accounts for storing wealth\investments, which usually hate 3rd-party wires.

The issue is during account opening they ask you what your total wealth is and where that came from, not just the initial deposit to open the bank.

So far the initial deposit I’ve said I’ll be making just comes from savings from my previous employment (which I have payslips to show for example).

For your case to work I’d have to lie to the bank which I’m not going to do.

 

[BoomBoom]

If you fail to open local bank account you should try swissquote. They can issue you a credit card with gbp/eur/usd directly, so you can at least spend your crypto money at that way.

 

[philthaiven]

Another update. I was rejected for Barclays priority banking in Jersey as they have “no appetite for any clients who have above a certain % of their wealth deriving from cryptocurrency”. They were apologetic and agreed I was very low risk but theres basically very little reward to them as priority banking is free and they guessed I wouldn’t leave a huge balance there, it would mostly be for the odd transaction. They would however accept me for private banking (£5m+ to invest).

In the meantime I successfully opened GBP/EUR/USD accounts at SEBA bank in Switzerland which has been great and the KYC process was fine (they’re knowledgable about crypto so I could prove all my purchases easily).

I’m a bit concerned about the fact seba is quite new and linked quite heavily to crypto so who knows if they’ll be around in 10 years (the whole reason I’m cashing out 50% of my crypto is to diversify away from the ecosystem) so ideally I would have the best bank I could get and put a big chunk of money there to invest.
Can people recommend the best private banks in the world to deposit £5M+? So far I’m thinking Barclays in Jersey, big private banks in Switzerland or big private banks in Singapore. Need to be crypto friendly and stable with not gigantic fees.

 

[TravelAfficionado]

Thanks for providing updates.

Personally I wouldn't want to leave a lot of cash in a private bank or invest with them due to their high fees. Better to invest through one or more low-cost brokers: IBKR, Swissquote, Saxobank, etc.

Nevertheless, I can understand that in your situation you might want a relationship with a private bank to facilitate the flow from crypto to stocks, and so you may be willing to incur the fees.

Have you tried HSBC in Jersey? I believe many of the big HNWIs in Jersey bank with them. Also, sticking with a Jersey bank helps demonstrate you're resident there. That said, I also know HSBC can be rather bureaucratic at times.

--

Also, separately, do you know yet what social security contributions you'll be paying in Jersey? As you're not working, it'll be class 2 contributions, which are "12.5%"... but on what income?... presumably your staking income plus dividends from the stocks/ETFs you'll be buying? I'm wondering how the tax authority will calculate this.

Government of Jersey

Find out why you must pay contributions, contributions levels, who's exempt and how to opt out

www.gov.je

This link says: "If we don’t hear from you, your contributions bill will be £1,019.50 per month January to December in 2022." This amount looks like it's basically the cap on class 2 contributions. So probably you'll be at this cap, so your income level doesn't matter... you'll just pay £1,019.50 per month.

 

[philthaiven]

I do have an account with IBKR under my Jersey address and would like to use that to invest on and for any currency transfers because it’s much cheaper. As you say though it’s more about being able to keep a bank account open for transactions and it seems like risk/reward is not worth it for non private banks to provide this. So I have to be willing to put 1-5M into a private bank and take some more fees.

HSBC is the most anti crypto bank in the world, they don’t even let their clients hold microstrategy (MSTR) because the company holds a lot of btc on their balance sheet. So they’d never open an account with me.

Good point on jersey residency, I’m leaning towards Barclays PB in Jersey for this reason + their fees are the most reasonable out of any PBs I’ve see. (Capped £1200 a year fee for custody and most everything else is free).

On social security I need to get some more advice on this, but you don’t have to pay it for the first 6 months after becoming resident. It’s also calculated by how much you earned 2 years ago so need to understand if that applies to my U.K. income 2 years ago. I think generally it’s 12.5% up to that cap of 1k a month but if you have a lower income then it scales down - need to check. Otherwise if you just had a very low self employed income of say 15k a year then you’d have to pay 12k tax still? Doesn’t seem right.

I actually have 0 income right now, I was staking solana (SOL) while in the U.K. and liable for income tax on it but after moving to Jersey I swapped it for mSOL (no cap gains tax payable) which rather than giving you new tokens for staking it accrues the staking reward value to your existing static number of tokens which means it’s an unrealised gain and I can just sell a small amount each month if I wish tax free. I also have no stocks that pay dividends.

 

[KDX]

HSBC is the most anti crypto bank in the world, they don’t even let their clients hold microstrategy (MSTR) because the company holds a lot of btc on their balance sheet. So they’d never open an account with me.

Have you tried outright just going straight to private banking? Make it clear you will deposit millions etc. That might make their risk appetite a bit larger. I'd still contact HSBC just in case.

 

[boomy]

That might make their risk appetite a bit larger. I'd still contact HSBC just in case.

you will need to have a lot of documents with you if you are going to do that. Better arrange with a tax consultant and lawyer too.

 

[TravelAfficionado]

On the banking front, I agree with @KDX that it's worth contacting HSBC private banking directly to check. But otherwise Barclays is a good option for a very reasonable fee.

Regarding income, that's some nice structuring! I believe Jersey previously taxed accumulation investment funds based on a "notional interest" of 1%, but I believe they no longer do this as it wasn't worth the hassle. So you should be good to invest in accumulating ETFs (as well as non-dividend paying stocks).

However, while zero income is probably fine from an income tax perspective, I really wonder how this will work for social security. It seems you can apply for "Low Income Contribution Relief", which disqualifies you from getting benefits in the future (not that you'd need them!). Or maybe it's as simple as 0 x 12.5% = 0. However, I know that in some countries the authorities expect some minimum contributions from working age adults. So it could be better to pay 12.5% of something - in which case maybe buy a few dividend-paying ETFs/stocks? (Or get some consulting income or rental income, but those could be tricky given you don't have the right to work or own property in Jersey itself.)

(P.S. This is all very interesting to me as I might consider Jersey residence in the future.)

 

[philthaiven]

I think I’d rather just go for any other private bank than hsbc to be honest, unless there’s anything particularly good about them. Fun fact they’re the only bank in Jersey that is under their U.K. structure which means they’re the only one that provides credit cards (Jersey has a strange law prohibiting jersey banks from allowing credit cards so barely anyone has them).

For social security yeah maybe it’s better to have a small income of say 10k a year and that might actually reduce the tax compared to 0 income.

I’ve said this stuff earlier in the thread but I think Jersey is only a good option for quite a niche set of people because unless you get a job in demand or go through the HNWI plan (and pay 100k+ tax pa flat) then you’ll be non-qualified/registered status and only have crappy housing available so it’s only useful if you want to be out of the country quite a lot like I do.

After being in Jersey for a bit here’s some more pros and cons:

Pros:
- very low crime
- low taxes
- stable politically
- Minimal bureaucracy
- All the houses, streets and other infrastructure is just good quality and made out of nice materials
- No VAT (5% sales tax only on stuff above £135) so everything online 15-20% cheaper than U.K.
- Great food and restaurants, Michelin stars
- London only 45 min flight away
- Government are pro crypto

Cons:
- It’s very boring and small. I wouldn’t mind as much if I had a family and an established group of friends but for a single guy in my 20s used to London or travelling abroad it’s kinda painful to be there for too long.

 

[TravelAfficionado]

I've visited Jersey a lot and largely agree with your pros & cons list. Also, the climate is fairly pleasant and it's good for water sports (motorboat, sailing, surfing, etc). But I often get a claustrophobic feeling when staying there, especially inland with the narrow roads boxed in by walls and hedges. The key is to get off the island as much as possible.

I will spend a few weeks in Jersey as usual this spring/summer. Open to meeting up if you want (I'm in my 30s).

 

[Jmeery1]

I was staking solana (SOL) while in the U.K. and liable for income tax on it but after moving to Jersey I swapped it for mSOL (no cap gains tax payable) which rather than giving you new tokens for staking it accrues the staking reward value to your existing static number of tokens which means it’s an unrealised gain and I can just sell a small amount each month if I wish tax free.

This is interesting! Do you know of any similar staking reward accrual for BTC or ETH? It seems to me like receiving staking rewards usually means higher taxes as income rather than capital gains

 

[philthaiven]

I’m looking forward to trying surfing and maybe sailing in the summer when the weather is better. Up for meeting up then.

@Jmeery1 I don’t know of any comparable staking methods for other blockchains than solana which keep the token number static so it’s an unrealised gain rather than income of new tokens. For btc there’s no staking at all as it’s proof of work not proof of stake but if you lend it out (on ledn.io or crypto.com) you have to pay income tax on it. I’m dubious the reward is worth all of the risks to lend out bitcoin though. You’re taking on credit risk, counterparty risk, hacking risk, regulatory risk on an asset with no lender of last resort for 2-3%.

 

[Battura]

If you don't want to waste your 20s living on a boring island why not move to Australia?

Pros:
* Under 30s from UK can easily get a working holiday visa for 1 year + option to renew for 1 year
* No taxes on anything derived outside of Australia if you're not a citizen, including capital gains
* Crypto-friendly banks, no problem cashing out big on local exchanges
* Good access to trading platforms and investment products
* Good weather and lifestyle
* Nice houses, great food and restaurants in the big cities
* Not a shady tax haven

Cons:
* You will need to change visas and find a different way if you want to stay longer, but you will be rich enough by then that you can find a nice solution
* Not a 45 minute flight from London

 

[philthaiven]

I don’t need to stay on the island, I only need to spend 1 day a year on it to remain tax resident. In practice I’m happy to spend a month or so there in the summer but it doesn’t have the 183 day stay requirements like most other countries. I’m currently not in the country and travelling wherever I like.

Also Jersey is not deemed a shady tax haven, it’s deemed a ‘low tax jurisdiction’ and is very strict on aml/kyc. It’s not on the EUs or any other grey/black lists.

Australia seems like a nice place to visit but I don’t think I’d want to live there at the moment, especially after how draconian they were with covid (couldn’t leave the country for nearly 2 years, Melbourne had a 1 year stay at home order lockdown, longest in the world).

Maybe something to consider in the future, I have friends who live there and liked it pre covid.

 

[Battura]

Didn't mean to suggest Jersey was shady, only that Australia is not perceived as a tax haven. Good that you only need to stay 1 day, sounds like a great option for UK citizens.

 

[Verbatim]

If you don't want to waste your 20s living on a boring island why not move to Australia?

Pros:
* Under 30s from UK can easily get a working holiday visa for 1 year + option to renew for 1 year
* No taxes on anything derived outside of Australia if you're not a citizen, including capital gains
* Crypto-friendly banks, no problem cashing out big on local exchanges
* Good access to trading platforms and investment products
* Good weather and lifestyle
* Nice houses, great food and restaurants in the big cities
* Not a shady tax haven

Cons:
* You will need to change visas and find a different way if you want to stay longer, but you will be rich enough by then that you can find a nice solution
* Not a 45 minute flight from London

Australia has territorial taxation? I find that hard to believe.

 

[backpacker]

* No taxes on anything derived outside of Australia if you're not a citizen, including capital gains

Wrong!
Read and study the details:

Foreign and worldwide income

Check if you need to declare foreign income and pay tax, the tax you pay depends on your residency for tax purposes.

www.ato.gov.au

 

[JohnnyDoe]

If you don't want to waste your 20s living on a boring island why not move to Australia?

Pros:
* Under 30s from UK can easily get a working holiday visa for 1 year + option to renew for 1 year
* No taxes on anything derived outside of Australia if you're not a citizen, including capital gains
* Crypto-friendly banks, no problem cashing out big on local exchanges
* Good access to trading platforms and investment products
* Good weather and lifestyle
* Nice houses, great food and restaurants in the big cities
* Not a shady tax haven

Cons:
* You will need to change visas and find a different way if you want to stay longer, but you will be rich enough by then that you can find a nice solution
* Not a 45 minute flight from London

Another small cons: nazi government that arrests people not wearing a mask.

 

[Battura]

Australia has territorial taxation? I find that hard to believe.

Yes, if you are a 'temporary resident' which a working holiday visa holder would be.

Wrong!
Read and study the details:

Foreign and worldwide income

Check if you need to declare foreign income and pay tax, the tax you pay depends on your residency for tax purposes.

www.ato.gov.au

The problem with doing your own research is that you might miss something: Foreign income exemption for foreign residents

Another small cons: nazi government that arrests people not wearing a mask.

People on this forum happily hand over blood samples to the government to get their Emirates ID to be able to commit financial crimes in an actual authoritarian police state known for locking up people who commit financial crimes indefinitely. What makes you think they care about 'nazi' governments? Or that they're so dumb that they won't voluntarily wear a mask during a pandemic?