Last Updated on 3rd June 2024 Many expats living overseas benefit from expert expat tax services advice and financial planning guidance to safeguard their wealth, protect their pension benefits and ensure they have the right strategy to finance their expected lifestyle.
It is highly advisable to seek professional support before proceeding with an international move because there are complex decisions and potential tax considerations, whether you have physical investment assets, localised UK funds or a complex wealth structure.
Let’s look at why pre-emptive planning can maximise your tax efficiencies prior to a relocation that may preclude your taking up favourable investment opportunities that are not open to overseas foreign nationals.
Financial Decision-Making Ahead of an Overseas Move
There are countless factors to consider when relocating to a different country, and some products or investments need careful analysis to determine the right options – and those that meet your plans once you have finalised your move.
Examples include:
- Exposure to Capital Gains Tax in the UK on existing assets or properties you intend to retain for the future or sell before the relocation.
- Double tax treaties between Britain and your intended home country – and what they mean for your income, investment, and business taxes.
- Estate and succession planning, including where your investments are held and how a relocation will impact your estate.
- Pension transfers and benefits, such as drawing down a lump sum to finance part of your move, where you intend to retire and when, and the tax implications of either accessing a UK pension from abroad or tax exposure associated with an overseas transfer.
Planning your finances with due diligence, awareness of the options, and an understanding of the pros and cons of each solution will ensure you don’t find yourself with an unexpected tax liability once you have settled into your new home.
Some UK taxes apply to all British citizens regardless of residency status, so these aspects must also be factored in. For example, retained UK assets above the threshold may be subject to HMRC inheritance tax even if you have lived abroad for many years.
Working through each fund or product in your portfolio, addressing concerns and forecasting your income from investments before a move is the best way to proceed with confidence that your finances are in a strong position for the future.
Receiving Expat Tax Advice at the Right Time
You do not need to wait until after a location to seek advice – nor should you!
Filing tax returns, sometimes in two locations, can be complex, and where you are adjusting to foreign bank accounts and tax regimes, an error can be costly, even if it is an honest mistranslation or misunderstanding.
Having a qualified tax consultant on hand, well versed in the tax regulations both at home and in your new country of residence, is useful. They can help you navigate the transition, steer you away from typical pitfalls and keep your tax matters compliant and complete in every relevant jurisdiction.
Deferring this important planning process until the time comes to file a return can be disastrous, particularly because international tax returns are often time-consuming.
Speaking to a knowledgeable tax adviser with a thorough understanding of eligible exemptions, allowances, and declarable income and assets will give you plenty of time to prepare and avoid falling foul of different tax requirements or failing to meet deadlines.
You may also have opportunities to time your move strategically, ensuring you become a legal tax resident of a new country at an optimal time to minimise tax payment or filing obligations.
Essential Tasks Ahead of an International Relocation
Most visa schemes have specific requirements, depending on your route to overseas residency or citizenship and the terms attached to your permit.
In almost every case, you must provide evidence of insurance coverage or private wealth before you can start the process of shipping furniture and belongings abroad.
Others are optional but may prove invaluable if anything goes wrong:
- Providing proof of net wealth or a secure income stream outside the new country of residence.
- Demonstrating you have adequate private health insurance, including repatriation, for all family members relocating or the assets to finance emergency treatments without relying on public healthcare services.
- Travel insurance and life insurance, plus shipping insurance to cover all high-value belongings and items being shipped overseas.
- Medical and sometimes dental reports disclosing pre-existing conditions. You may need to register overseas with a doctor or clinic if you rely on prescription medication.
- Property insurance for any new rented or purchased accommodation abroad, plus cover for retained property assets in the UK. If you wish to rent out your former home, you may need to revisit mortgage arrangements or organise alternative insurance for a rented asset.
- Investing in a property in an eligible location and above a required value or setting up a tenancy agreement to meet relevant visa terms.
An expat tax adviser or financial consultant can run through more detailed checklists based on your visa type, relocation destination, wealth assets and income to ensure you have carried out all the necessary tasks in good time for your planned relocation date.
The Benefit of Specialist Expat Tax Services
Taxation is perhaps the biggest financial factor that can make a relocation successful or problematic. Proceeding with a move with full knowledge of how the tax system works and how it affects your finances is essential.
Some decisions may only apply whilst you are a UK resident, such as accessing specific tax-efficient savings products or applying for a fund transfer. Once you become a foreign national, the options available may reduce. Although a great deal of financing planning is involved, it is far preferable to be confident in your decision-making and have oversight of the multiple potential choices open to you well ahead of your expected move.
Please contact the global Chase Buchanan team at any of our offices throughout Europe and North America if you would like more information about how we can help with a move to or from any of our locations.
*Information correct as at December 2022