Relocating to a different country involves various considerations from deciding where to live and settling into a new job to, perhaps, finding new schools for your children. While these can be daunting tasks, it’s important to consider your financial circumstances well in advance of your move to ensure you take full advantage of all the benefits available to you. In this article, we explore the financial aspects of relocating to the UK, with a particular focus on the tax implications.

In the UK, the way you are taxed by HM Revenue and Customs (HMRC) is based on your residency and domicile status. Your residency status is simply where you live, but your domicile status is a little more complicated. It’s generally based on where you originated – either where you were born or where your father came from – or it can be by choice, if you are over 16 and choose to live indefinitely in another country. A UK resident whose permanent home is outside the UK is known as a non-domiciled individual or ‘non-dom’, which is purely a description of their tax status and indicates they do not intend to live permanently in the UK.

The difference between residence and domicile is important. Individuals who are both UK resident and domiciled must pay UK tax on their worldwide income and gains. However, if you are a non-domiciled individual living in the UK you can choose to register your non-domiciled status, which means you will only be taxed on your income and gains earned in the UK. You will not have to pay UK tax on any income or gains earned overseas unless you bring that money into the UK.

A good understanding of UK tax legislation is essential, and your personal circumstances should be carefully considered with the help of tax professionals. Seeking expert advice will help you make more informed financial decisions when you relocate.

If you are living in the UK but don’t intend the move to be permanent, you can choose to be taxed only on your income and gains earned in the UK and those which you bring into the UK. This is known as the remittance basis of taxation, and it means any foreign income and gains remain outside of the scope of UK taxation, which can be advantageous if you have significant foreign income or assets. The remittance basis is only available for the first 15 years of living in the UK, but during this time it provides the potential to secure wealth and avoid tax erosion. After this period, you will automatically be ‘deemed’ to be domiciled in the UK and will have to pay tax on your worldwide income.

Choosing the remittance basis of taxation has wide implications, specifically for your investment strategies and foreign income management. In particular, separation of onshore and offshore bank accounts and investments plays a pivotal role in ensuring you are able to benefit from this planning opportunity. If your relocation will involve borrowing to buy a new home, or for other purposes, special regard must also be given to where the loan is granted from and how and where it’s serviced, in order to avoid any remittance issues. This is where a private bank with access to both onshore and tax neutral, offshore, capabilities can be very helpful.

At Centurium Bank, we can work with you and your tax advisers to help structure your banking, investment and borrowing requirements in the most effective way when relocating to the UK. In addition to this, we can assess your current circumstances and put a plan in place to help you achieve your goals and objectives. We use specialist software to model and help you visualise your financial future, exploring different scenarios and options, all to ensure you remain on track with your plan.

To ensure you are fully prepared for your UK move, we have created two guides, A guide for moving to the UK and A guide for South Africans moving to the UK which provide more detail.

Clients of Centurium Bank can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)7488 845584 to speak to our Client Services team. At Centurium Bank, multi-generational relationships are really important to us. So we work with you and your family to offer the appropriate support at whatever stage you and your family are in life.

If you would like to find out more about how we help with wealth planning support, please contact us on the number above or via our Contact us page.

Any examples of investments and structures used are for illustrative purposes only. The inclusion does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

The post Thinking ahead when moving to the UK appeared first on Centurium Bank.

“If you don’t know where you are going, you’ll end up someplace else.” This is particularly appropriate when we consider our financial goals and aspirations. As an expatriate living abroad, having a plan can be even more important as you are likely to have more complex financial needs and assets spread around the world.

Having lived in London for several years and believing not much could compare to its vibrancy and buzz, my plan for my future expat life needed to be a good one if I was to avoid disappointment. Here I am today in the heart of Dubai in my unlined suit, something I learned very quickly was needed to combat the intense heat. And Dubai didn’t disappoint. The largely expatriate society (making up around 88% of the current population of the United Arab Emirates) offers a culturally diverse pool for networking and socialising, that I have chosen to immerse myself in fully. While it would be easy to be led astray by the high standard of living, the attractive benefits such as tax-free income has allowed me to remain focused on my financial targets for the future.

Whatever your reasons for choosing the expatriate life, whether you are on a work secondment, you’re a retiree or are just escaping to sunnier climes, having an effective financial plan can help you maintain your lifestyle and ensure your diverse financial assets are working together for your future.

The best place to start your plan is by understanding what you want from life. Your life goals can usually be split into short, medium and long-term aims, they need to be reasonably achievable and should be specific to you. It often helps to see a list of typical goals to help you focus on what is most important for you and your family, for example:

By prioritising your goals and a timeframe for achieving them, you will be able to estimate how much money you will need and when. This will form the roadmap for your plan and you can start to manage your finances in the most effective way to attain your goals.

Making a plan means you should record your current income and living expenses, and calculate how much money you have available to put towards achieving your goals. It is unlikely your income will remain the same over your lifetime, so this is something you can build into your financial plan. You should also consider other sources of income you may have over time from investments, your pension, or perhaps an inheritance. Against these, you need to include the costs and timing of your short and medium-term goals, such as buying a second home, paying for children’s education or returning to your home country.

One thing that could easily be overlooked, while you are enthusiastically making your final preparations for moving is, do you plan to return to your home country at some point? If so, you will need to start planning well in advance to ensure the move back is seamless and tax efficient. Your financial situation as an expatriate may no longer be applicable if you become tax resident in another country, so a review of the potential implications is vital. Tax treatment depends on your individual circumstances and may be subject to change in the future so it is important to get specialist advice. While we don’t give tax advice, we have the experience to point you in the right direction, not least as it makes sense to look into the tax payment schedule for your new destination.

For example, If you intend to move back to the UK for example, it pays to keep up your Class 3 national insurance contributions as you need 35 qualifying years – that’s up from 30 years previously – to be entitled to the full UK state pension. In addition, you should beware of spending too much time in the UK while preparing for your return, as you could accidentally bring forward the start date of your UK tax residence status. The number of days spent in the UK to trigger your residency can vary and is based on the amount of time you have been non-UK resident for. This is well worth not leaving to chance.

Hong Kong, Singapore and Dubai are popular choices for those looking for warmer climes. However, the high cost of living can be a deterrent for the long-term, but if you can’t bear the thought of cold, grey winters in the UK, you could opt for an investor visa and switch to working in Australia for a while, before retiring there or moving to sunny Cyprus, Gibraltar or Malta.

You should also review any existing pension or investment arrangements to ensure they remain in line with your goals. If you plan to return to the UK, it is worth considering the use of tax-efficient investment structures, such as ISAs and single premium life insurance bonds. If you have a qualifying recognised overseas pension scheme, you must inform your provider if you intend to move to a different jurisdiction.

If you have any assets that have risen in value, you may consider selling them with a view to ‘crystallising’ those gains before you become tax resident in another country.

Tax is, however, just one consideration. Other factors, such as to how to fund your lifestyle, buy a property, manage succession planning, and pay for health care and children’s education should all be factored into your plan.

It is never too soon to set up a financial plan, but once you have, it does not mean your work is done. It pays to review it regularly to ensure it still aligns with your current situation and remains on track to meet your goals. That way you can continue to enjoy an international lifestyle, while knowing your wealth is working towards your future goals. You don’t want to end up just ‘someplace else’, financial nor geographically.

Clients of Centurium Bank can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)7488 845584 to speak to our Client Services team.

If you would like to find out more about how we can help you with wealth planning support, or specific support when planning your retirement, as well as for other major life events, please contact us on the number above or via our Contact us page.

We do not offer legal advice. We would always recommend you seek professional legal advice in relation to your will and lasting powers of attorney. We are, however, happy to work with your legal team, or to provide an introduction to a suitable lawyer should you wish.

Sources: Edaradia

Quote: Yogi Berra

Any examples of investments and structures used are for illustrative purposes only. The inclusion does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

The post Don’t end up ‘someplace else’ – a plan for expat living appeared first on Centurium Bank.