Labour victory could shatter aliyah dreams
IN THE days before Pesach, outside parliament there were “enough is enough” protests, aimed at Jeremy Corbyn and antisemitism within the Labour party. As this is a finance section, it is not for me to debate the rights or wrongs of the Labour leader. However, what I can say is that hardly a meeting goes by without his name being mentioned to us by concerned clients.
As regular readers will know, much of my work is with people considering making aliyah. I help them organise their finances and investments in preparation.
The question people keep asking me is, “what happens if Corbyn gets in?”. Others say more matter-of-factly, “if Corbyn gets in, I’m definitely leaving the UK and making aliyah”.
So what would happen if he got in and is there anything one can do now in anticipation? The first thing I say to clients is: it is by no means a given that Corbyn will get in. I remind people how Theresa May was 20 points ahead in the polls prior to the last election. It was a “given” that she would sail to power with a huge majority. However, she is in Downing Street by the skin of her teeth.
People moving to Israel have suffered from the fall in sterling. I think it is fair to assume that in a Corbyn government, the financial markets would be spooked and the pound would take a thumping. This would put the dream of buying a home and moving to Israel out of reach for many. There would probably be a double whammy, as most of my clients (particularly in London) sell their homes and use this money to invest or buy a property in Israel. With the threat of wealth and property taxes, along with the possibility of rent controls, the outlook for UK property under Corbyn looks particularly uncertain.
If the pound does crash, the Labour party has already hinted at the possibility of exchange/capital controls, where restrictions could be placed on how much money you can take out of the country. Thus, not only would your pound be worth less, you might not be able to take/transfer much out of the country — something I thought was consigned to history books and astonishing in modern Britain.
This scenario is quite grim, so it is not surprising some people are nervous and considering actions “just in case”. Unfortunately, if one waits for certainty, it will be too late, as most of the above would most likely happen in the hours and days post-election.
It is perfectly legal to move some of your assets and investments offshore, provided you declare them and pay any taxes required. What is illegal is “hiding” money offshore and not paying the appropriate taxes.
This does not necessarily mean moving money to Israel. Using tried and tested offshore centres such as the Isle of Man and Jersey, where you can access household-name financial institutions, should do the trick. It would be reasonable to expect that an Israeli resident (post-aliyah) with assets offshore would be off the UK government’s radar.
Currency is possibly your biggest risk; your pound could be worth substantially less under Corbyn, so the biggest protection measure you could take now is to move some money out of sterling into other currencies. These can be kept in cash or investments, so your money has the opportunity to grow in a similar way to one’s current investments. The main difference would be that it would be growing in a different currency. However, a result of Brexit is that the pound is weaker than previously and, although it is slowly recovering, it is still less than pre-Brexit. So you need to weigh up if it is worth moving out of sterling at current rates.
It is possible to invest offshore in a wide variety of investments and currencies. This is what we do for our clients making imminent aliyah. However, for those thinking about aliyah in the future it is possible to invest offshore while still living in the UK. Aside
Future olim might face a property double whammy’