Accountants are tipping France and Ireland alongside Switzerland as destinations for the wealthy looking to avoid Britain’s rising tax rates.

While a steady stream of hedge fund managers are moving to Geneva, where personal tax rates are half those in Britain, Dublin solicitors are seeing an increase in inquiries from rich individuals wanting a bolthole closer to Britain.

Also, UK company directors who already have homes in France are being offered schemes under which they pay no income tax, subject to conditions.

The rise in “tax tourism” has been prompted by forthcoming income tax changes. From April, the top rate will rise to 50% for those earning more than £150,000, while pensions tax relief will be cut. Those earning more than £100,000 will also pay more as the tax-free personal allowance will be taken away.

Carol Hogan of William Fry, the Dublin solicitors, said: “We began hearing from people 18 months ago after the introduction of tougher rules for those who are not domiciled in the UK. With the planned income tax rise in April, there has been an additional bout of queries.

“Compared with places such as Switzerland, Dublin has the benefit of being closer to the UK, English-speaking, and it has a more favourable tax treatment toward non-doms [those whose main residence is in another country].”

However, advisers are awaiting the outcome of two Court of Appeal cases that could, if the Revenue triumphs, spark a wave of investigations into non-resident Britons. To avoid being treated as resident for tax purposes, Britons must spend no more than an average of 90 days in the country a year.

One case, involving Robert Gaines-Cooper, an entrepreneur living in the Seychelles, will determine if it is possible to say you are non-resident if you keep close ties with Britain — irrespective of whether you can satisfy the 90-day rule.

The second case could tighten the rules even further. It involves David Grace, a pilot, who kept only overnight accommodation in Britain. His permanent home, family, car and private aircraft were in South Africa. The Revenue said he still had to pay tax in Britain and the case has gone to appeal.

Antonio Risorto, senior tax manager at Grant Thornton, the accountant, said: “As the rules stand, you must show you have broken ties with the UK to be exempt from UK tax rates.”

We look at what is on offer for potential tax exiles:

FRANCE

There are lucrative income tax breaks available to residents of France, which allow individuals to work in the UK for longer than 90 days.

Caroline Cohen, of The French Law Practice, said: “Since 2008 President Sarkozy has been making changes to tax laws to attract more people to France.”

A total exemption from income tax applies to resident salaried employees and directors who spend more than 120 days a year outside France developing the company’s business for income earned while outside the country. The company must be based in France or another EU country.

David Anderson of Sykes Anderson, a London law firm, said: “It’s a very popular wheeze. The exemption applies for work done outside France that can be described roughly as ‘commercial marketing’ for the company. However, it is always advisable to get clearance from the French authorities before relying on it.”

This work typically involves sales and marketing but could include, say, installing IT. The exemption from tax extends to bonuses paid in cash or as part of a company share scheme.

Taking advantage of it will involve becoming non-resident in the UK. You could get caught by UK taxes if you spend more than 90 days in Britain but advisers said that in many cases the double-taxation treaty between Britain and France will apply, in which case, you will not have to pay tax.

There are further benefits. French income tax is charged at up to 40% for residents but you are taxed as a household. This means your income is added to that of your spouse and children, and then the total is split into equal parts with each taxed at the personal rate.

Anderson said: “You can each take advantage of your tax-free personal allowance, which applies on the first €5,875 (£5,265) and lower tax rates which apply on lower bands of income.”

IRELAND

The biggest advantage of becoming a non-dom resident of Ireland for tax purposes is that the rest of your worldwide earnings are safe from Irish taxes. There are also benefits for succession planning.

Last year, the UK government decided that non-doms living in Britain for more than seven years would have to pay tax on all their worldwide income — even if this was kept offshore. An exception is granted if you pay a £30,000 levy, which allows you to remain outside the tax net.

In Ireland, however, non-doms (someone who does not intend to be a permanent resident) do not have to worry about paying income tax on money earned outside the country unless they remit the income — that is, bring it onshore.

To qualify as an Irish resident, you must be present for 183 days in the tax year, or 280 days over two years, with a minimum of 30 days in each year.

Personal tax rates in Ireland are marginally better than Britain. The top rate is 41% on earnings above €36,400.

Rates could rise at the next budget. The Irish government has already pledged to cut tax relief on pension contributions from 49% to 30% for Irish residents and introduced an additional 6% levy for income over €174,980 (income up to €75,036 is subject to a 2% income levy and between €75,036 and €174,980 is subject to a 4% levy).

Succession planning is also more attractive in Ireland, where capital acquisitions tax is levied at 25% compared with UK inheritance tax at 40%.

However, Risorto said: “Ireland has its own economic woes and there are a lot of questions about prevailing tax rates in that jurisdiction.”

SWITZERLAND

The popular choice among hedge fund managers, Switzerland’s average top personal tax rate is half that of Britain.

Jonathan Ivinson, head of tax at Hogan & Hartson, has temporarily moved to the law firm’s Geneva office because of the number of clients wanting to relocate to Switzerland. The top rate is about 25% and in cantons such as Zug and Schwyz it is closer to 20%.

There is also a cheaper rate of tax on dividend income earned by owners and managers of a business. In Britain, the rate is 32.5%, rising to 42.5% next year, compared with dividends taxed at a 50% discount on an individual’s personal tax rate. In Geneva, for example, if you pay 48% on income, you will pay 24% on dividend income. In Zug, the top rate is also 24%, although this is cut to 12% for business owners and managers.

Rates on worldwide income are not quite as generous as in Ireland. Most residents are exempt from tax on such income although they must pay a one-off lump-sum — usually five times the annual rental value of the property in which they live. Zurich, however, abolished this in February.

Threat to non-residents

Advisers have warned that thousands of non-resident Britons face scrutiny by the Revenue in the wake of two cases, brought by Robert Gaine — Cooper and David Grace and awaiting judicial review in the Court of Appeal.

Mike Warburton of Grant Thornton, the accountant, said: “The court should find that if they are out of the country for 90 days they are non-resident, as the law states — but it may well decide to uphold the Revenue’s decision.”