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Reviewing your currency, investment, tax planning and pension options now can help you secure financial security, whatever Brexit brings. 

No matter how you feel about Brexit, now that we are only months away from the due date, expatriates need to prepare in a practical sense. Although there are still many unanswered questions about what Brexit will actually mean, there are steps you can take to make your financial position in your country of choice as secure as possible. 

Review the best currency mix for you 

It is common for UK nationals to keep most of their savings and investments in British pounds. Being a familiar currency, it is understandable that expatriates want to retain financial connections with the UK, such as through property or a British bank account. 

But if you are living in Europe and spending euros in your daily life, it can become much more expensive to take your income in sterling. The value of both currencies is especially vulnerable as Brexit unfolds. 

It is possible to limit exchange rate risk by choosing investment structures that offer the flexibility to invest and make withdrawals in different currencies. You could, for example, invest in sterling now and switch to euros when rates are favourable, or vice versa, so explore your options.

Widen your investment horizons

Many expatriates favour British assets when investing, such as UK corporate bonds or FTSE-listed shares. This bias is more likely if you are still using a UK-based adviser. However, it could mean your financial planning is more suited to a UK resident than someone in your situation. Without local expertise, you might make costly mistakes and miss out on available opportunities in your country of residency that could work more favourably for your circumstances.

See more on the risks of home bias when investing

Meanwhile, achieving higher returns in this difficult climate means looking further than bank savings and fixed interest investment options – and these uncertain times may offer opportunities. For example, prolonged low interest rates are unwelcome when it comes to money in the bank, but generally have positive effects on share markets.

Diversify, diversify, diversify

While market movements can be unsettling, those invested for the medium to long-term in a well-diversified portfolio are best placed to see their wealth grow over time. Your financial adviser should undertake an objective assessment of your risk appetite to ensure your portfolio offers the right balance of risk and return for your peace of mind.

Amidst so much uncertainty, it is more important than ever to make sure your portfolio is not overweight in UK assets and is suitably diversified. You can reduce risk – Brexit-related or otherwise – by spreading investments across regions, asset types and market sectors to limit your exposure in any one area.

See more investment tips
 

Get your tax planning in order 

When it comes to the taxes you pay in your country of residency, there is no reason for anything to change post-Brexit. Your tax treatment as an expatriate is determined by the relevant double tax treaty that exists independently of the EU. 

There are, however, some circumstances where taxation may be affected.

For example, once the UK leaves the EU/EEA, expatriates selling a home in Spain or Portugal to buy a British property will no longer be eligible for capital gains tax relief. 

Or if you are living in France and hold UK bonds, you may lose beneficial tax treatment post-Brexit. An adviser can recommend more tax-efficient ways to structure your investments, such as a suitable EU-issued assurance-vie that can also offer additional benefits such as currency flexibility. 

Wherever you live, it is a good idea to take personalised advice to establish if there are any potential implications of Brexit – and solutions – for your family’s circumstances. 

Download our Brexit guide for expatriates

Explore your pension options

As things stand, Brexit should have no impact on how expatriates can access funds from UK-registered pension schemes or transfer to a Qualifying Recognised Overseas Pension Scheme (QROPS).

However, many speculate that the UK could widen the 25% ‘overseas transfer charge’, which currently only affects EU residents who transfer UK pensions to a QROPS based outside the EU/EEA. Once outside the bloc, the UK gains freedom to tax capital within EU borders, so there may be a limited time to transfer to a QROPS tax-free. 

Transferring now will shelter pension funds from future changes to UK rules and can provide flexible currency options to protect your income from fluctuating exchange rates. However, as with any pension decision, it is crucial to seek personalised, regulated advice to establish the right approach for you.

Read our article 'Is time running out for today’s pension opportunities?'

Regularly review your finances 

In any event, you should revisit your financial planning at least annually. Regardless of Brexit, your circumstances and objectives can change over time, so what is right for you now may not be suitable in years to come. 

Now has never been a better time to build a good relationship with a locally-based financial adviser who can keep you informed of developments that affect you specifically as an expatriate. They can explain the cross-border implications and help you plan if and when you need to take action so you can continue enjoying your chosen lifestyle abroad.

Arrange a consultation with your local Blevins Franks adviser

 

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.