Retiring Abroad | Financial Planning
What to consider when moving abroad
Are you preparing to move abroad? An important consideration is how you will settle in once you are there.
Preparation is key prior to your relocation for a smooth transition into your new life. Take a look at our top tips for settling into your new location to help you through those first days and weeks after you move.
You must remember to inform the tax authorities (HMRC) in the UK that you intend to leave. If you don’t do this you may have to pay additional taxes which, as an expat, you are exempt from. Don’t forget your P85 form from Revenue and Customs, fill it in and return it. This will let the authorities know that you are leaving and will ensure you will be taxed appropriately in each country.
If you are paying tax overseas but still earning income tax from savings in the UK you need to fill out the form R105 from HMRC and send it to the financial institutions where your savings are held.
Ordinarily, tax is deducted from your interest income before you receive it. This form will request that tax not be applied in the future because your income will be taxed in your new country. If you fail to do this, you may find that you are taxed twice.
Completing your tax return as an expat
Even if you are resident in another country you may still be liable for tax on your income and gains made from assets.
Capital Gains Tax
If you still have property in the UK it is vital to know that any future sales as an expat may incur Capital Gains Tax. Before you move, ensure you know about the Capital Gains Tax rules.
Each country has its own tax rules, some specific for expats. You can find yourself in a sticky situation when not adhering to the local rules. It isn’t worth risking fines or imprisonment.
Get advice from a local financial adviser who will make sure you know and stick to the rules!
Be sure to find out your short term and long term eligibility for health care.
Britain has special agreements with various countries. Check to see if your country of choice is among them. If not you may need healthcare insurance.
Take a look at NHS Choices for more information and medical advice, whether in the UK or abroad.
It’s always a good idea to open on International Bank Account specifically designed to assist with moving money to avoid currency fluctuations and transaction fees.
You should also open a bank account locally in your country of choice.
People often ask us if they should close their UK bank accounts. This largely depends on whether you have such things as Direct Debits, Standing Orders and income being received from a rental property. If this is the case then it’s obviously wise to leave these accounts open.
There is also a possibility you can open an Expat Bank Account which is specifically designed for expats. These accounts are not usually in the UK or your country of residence. It will allow you to hold money in multiple currencies.
Are you planning to retire abroad? If the answer to this is yes then your pension is one of your most important factors. There is a lot of information you need to know about expat pensions which is extensively detailed on our site.
If your move is a serious move then it’s vital that you obtain professional advice on the various options to make sure you continue to get the best return on your investments, now and in the future.
It’s also important to take into account what will happen to your estate when you die. It’s vitally important that you create a will but also to seek help from a Financial Adviser who can help you manage your estate and minimise various tax liabilities including UK Inheritance Tax.
Individual Savings Accounts replaced Personal Equity Plans and allow UK residents to accumulate funds that grow tax free and, more recently, new rules provide some Inheritance Tax savings for families. An expat that has ISAs is able to maintain them, but cannot contribute to them. Expats need to check whether and income or capital gains needs to be disclosed and taxed in their new host country. In many cases, it is likely to be best advice to maintain the ISAs and not reinvest them into more expensive offshore products where the costs are more than the perceived tax savings.
Whether an expat or not, it is always a good idea to update your will. The local rules will often be different to the UK, especially in places like the Middle East and so it is important that local legal advice is sought. Avoid online will writing services, or IFAs offering this service and use a lawyer.
For those that are UK domicile, a move overseas does not remove you from the long arm of the taxman for death duties. Advice should be taken to check your domicility and, if deemed UK domicile, advice on how to mitigate the effects of Inheritance should be taken if you want future generations to benefit from the wealth you have accumulated.
Are you planning to rent out your house in the UK?
You need to decide how you want to manage the property, including how you may find and replace tenants, collect your rent and manage any maintenance and improvements on the property. You can use a letting agency in the UK to take care of all of this for a fee. Usually between 10-15% of the rental income.
With this there are tax implications. You need to make sure that the HMRC know your intentions. You may be able to apply for the Non-Resident Landlord Scheme which could have significant tax advantages.
As a non-resident you need to determine your likely rental income as this could be subject to UK income tax, even if for tax purposes you are non-resident.
Make sure you find expat landlord insurance which should cover you for every possibility, including your contents, accidental and deliberate damage and also your potential legal fees.
If you have a mortgage, make sure you inform the mortgage provider to ensure you don’t break the terms of your loan.
If you want to drive in your new country, make sure you learn the local laws and regulations. Be aware of local customs and laws and also licence requirements.
The International Driving Permit is an annual permit which is recognised internationally and usually allows the holder to drive with a valid UK licence.
Check with your new country as you may also need to apply for a local licence.
Don’t forget to set up mail redirection with the Post Office. You can arrange this for up to 12 months.
Remember to let your utility providers know that you are leaving. If you are leaving but renting your house out, you must inform your insurance company. Your existing policy may not cover the rental of your property. If you are still paying a mortgage on the property, you should also let your mortgage provider know.