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All possible care is taken to ensure the accuracy of the information in this section, but no responsibility can be accepted for the consequences of actions based on information provided. Users are encouraged to take relevant professional advice based on their personal circumstances from accountants or financial advisors familiar with expatriate affairs. It is worth noting that British financial regulations are amongst the strictest in the world, so a consultation with a UK based advisor regulated by the Financial Services Authority may be a prudent move. Some UK based accountants and advisers that may be able to assist you: Wilkins Kennedy, Buzzacott or Sovereign.
Many of the points below are most applicable to those people who planning an overseas move from the UK, or return, rather than permanent emigrants. In looking for services that suit your needs, you will find that many UK based products are not accessible, due to your circumstances. What we have tried to do in this section, is pick out resources that might be suitable, to speed up your search for information and professional advice. Tax You should check your potential tax exposure before moving abroad. The subject is complex and it is not possible to do the subject justice without reviewing personal circumstances as well as the tax regulations that apply in the countries that you are moving to and from. Many employers will arrange for tax affairs to be looked after by one of the well-known global accounting firms. However, these services may only cover the evaluation of an employer’s tax exposure, without looking at your personal investment or property income. Information about UK tax regulations is available at the Inland Revenue website, which has several guidance notes in their International Series published on line. Some key points, which you should discuss with your advisor: 1) Non-residents do not have to pay UK tax on income arising outside the UK. 2) The UK has a double taxation agreement with most countries, as listed by the Inland Revenue. This avoids the possibility of you paying tax twice on income 3) The time that you spend in the UK in any tax year, in the year you leave, in the subsequent period, and when you return defines non- residency, which will affect the tax you pay. Check precise rules at the Inland Revenue site. 4) Offshore investments may enable you avoid UK tax, with investments in deposits accounts or equity funds. Careful planning is also required prior to your return. Find out whether they are appropriate for you. 5) To avoid Capital Gains Tax, you may wish to dispose of assets (e.g.: a UK property you have rented out) that may show a gain above the CGT threshold (£7k in a single tax year) 6)
Non residents who do have a source of income in the UK are still able
to take advantage of UK income tax thresholds below which no, or lower
rate tax is payable:
Updated following March 2001 Budget. Further details on allowances are shown on the Inland Revenue website. Do not neglect the fact that that the country you are moving to or from will have regulations that will affect the tax you pay. This may include offshore funds, or assets and income in the UK. For example: some countries may require you to pay the equivalent of CGT on your own house in the UK, if you sell it while resident abroad. Current Accounts Despite increasing globalisation, you cannot assume that setting up a bank account in a foreign country will be straightforward. It would be wise to retain your UK bank account, and ask them to recommend a bank in the country you will go to. When establishing a foreign bank account, consider whether you will wish to have income or savings in the local country or in the UK. If you are working for an international company, they may be able to split your salary and pay some in the UK and some in your new country. If you have expenses to meet in the UK, there is merit in this. Do consider possible currency effects – in which currency is the salary fixed, and ask whether that changes if you split. If you are planning to make large savings from your expatriate salary, and return to the UK, then are exposed to currency risks if you take all your earnings locally, particularly if their currency weakens. To help in currency conversions, try the online conversion service provided by Xenon The service provided by Currencies4less, can deliver very competitive foreign exchange, particularly useful for large sums such as payment for property.If you need to shuffle money between UK and foreign accounts, this can be expensive if done frequently, £20 per transfer is not untypical. At some stage, if you wish to retain a UK current account, you might wish to review the arrangements, before you depart. The major high street banks now offer Internet based accounts – which make the managements and communication of your affairs so much easier when working at a distance. There are also some more competitive and innovative banks that have been established that offer Internet accounts that also earn relatively good rates of interest. Worth a look are: The large, mutually owned Nationwide; from the Cooperative bank: Smile; from the Prudential: Egg and from the Halifax: If. The last bank, Intelligent Finance, or “If” offers accounts for savings that pay rates equivalent to rates on any loans, mortgages or credit cards you have with them. Similar arrangements are offered by the Woolwich. Such arrangements can mean greater flexibility in budgeting and management of cashflow. Credit Cards When you move to a foreign country from the UK (or sometimes: vice versa), you may be taking up a well-paid job. However, when you need to get a local credit card (or enter into any credit or lease agreement) – you will have no local credit history or address. This can apply even if you are with the same bank or credit card company. This may be a nuisance. As a precaution, you ought to ensure that you have sufficient funds in your bank account to allow for short-term lack of credit. You might also wish to review the credit limit on an existing UK card. Those who are with or join American Express before they emigrate, should find they are able to take account of your previous credit history. In order to start with a local credit card, you may have to build up a credit limit slowly or they may require you to put cash into your credit card account, so you effectively finance it yourself. Be prepared. You should certainly seek to retain your UK credit card until you are certain that your local card is effective. Be aware that your card supplier may require that you have a UK address. Some people may choose to continue with their UK credit card, but you will be penalised through less attractive exchange rates for non Sterling transactions. Payment of credit card bills by direct debit from a UK bank account will enable you to avoid hassle caused by late receipt of bills and subsequent payments. Offshore Banks and Investments If you have a lot of money to invest, then you may be able to get personalised arrangements, with single multi currency accounts. Many UK banks or financial institutions operate through their offshore subsidiaries in places such as the Channel Islands or the Isle of Man. They offer a wide range of banking and investment management services. The first point worth bearing in mind is that offshore operations are not always subject to the same rules and regulations as UK based companies. Ensure you are dealing with reputable banks or advisors. Of the leading UK banks NatWest appear to have a good website for expatriate offshore services. A key advantage of offshore investments is that you should be able to reduce your tax exposure. In some cases this may not be worthwhile if your investment income is not significant. You may also find that the management charges or interest rates may not be as competitive as the taxable mainstream options in the UK, particularly if you would not pay higher rates of UK tax. For conventional trading on the UK stock market, there are several UK brokers that can offer online trading in UK equities. These include: Barclays and Stocktrade.To spread (or concentrate) risk amongst a number of equities: Investment Trusts, including index trackers, can also be traded through these online brokers. These UK investments, of course will be subject to tax if thresholds are exceeded. To keep an eye on the UK stock market, sites run by Interactive Investor, Motley Fool and the Financial Times are worth investigating. You can also use a service provided by Digitallook to get individually tailored email alerts whenever certain companies are in the news. Pensions & Life Assurance In order to ensure that you do not lose or reduce your entitlement to the UK state pension, you will need to keep up National Insurance contributions. The requirements depend on your precise circumstances, time out of the UK and your employer. See leaflet CA65 for further information. Life assurance can protect or give an income to dependents in the event of the death of the main provider. Shop around for the best deals. There are a large number of companies offering products. Life-Search has an online enquiry facility to obtain comparative quotes for UK based life policies. Ensure that the provider is aware of your overseas residency, and the policy has no exclusions or limits affected by this. Your long term intentions with regard to return to UK return to UK or permanent immigration may be crucial in determining the best plans, including use of offshore funds. Discuss with a financial advisor that is familiar with expatriate affairs. Be aware that UK state pensions are frozen, and do not increase annually if you emigrate to certain countries. In general if (having worked in the UK) you emigrate to the USA or the EU, then you get a state pension based on UK contributions, that is index linked. For most other countries, the UK state pension is frozen, and it is at the discretion of the local government as to whether they make it up to a comparable amount. For further information on this scandalous state of affairs check out the website of the UK Department of Social Security. The majority of pensioners affected by this unjust and arrogant stance of the British government are in Commonwealth countries. There are are number of action and support groups that you can consult in: Australia, Canada, New Zealand and South Africa. Mortgages If you wish to retain your UK property then there is an increasing range of competitive mortgage deals, if you need to finance it. Flexible arrangements are becoming more widely available that allows early repayment, if funds allow, as well as fixed rate or mortgages with short term discounts. There are various websites that allow comparison between UK mortgages. For example: E-Loan has an online comparator. Ensure that any loan is suitable given you may let the house, and are resident overseas. To help with the calculations and projections that are commonly required in the mortgage and investment decision support, try these calculators from Half Brain.com. These are simple calculation tools to help you, there is no requirement to pass on personal details to any finance or mortgage company. Insurance Whilst suitable insurance products may be available in your new location, you may wish to arrange insurance through the UK, before you depart, or extend this during your time abroad. If you on an overseas assignment, your employer may provide full cover, but check what this covers. If you need insurance you will find that although many major companies can quote and supply UK domestic insurance over the web for UK residents, this kind of specialist insurance is not so widely available. These two sites offer specialist insurance for expatriates: John Wason or SISA You will also need insurance for any UK property you keep. If you have property in the UK, normal house and contents insurance may not be appropriate. In particular if the house is unoccupied for long periods, 30 or 60 days are typical limits. Additionally you may wish to let the house, which may invalidate standard insurance. Check out: Letsure , who have a range of policies that may be suitable.
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