Coins and seedling in a jar: Resolutions for your financial wellbeing

Take time to check your tax planning, investments, pensions and estate planning are all on track to protect your family’s wealth in 2021 and beyond. 

You can benefit from fine tuning your financial planning at any time, but with Brexit now in full swing, there are some especially important New Year’s resolutions for UK nationals living in Europe. 

1. Check your residence position

Are you now lawfully resident in your chosen EU country? To lock in the right to remain post-Brexit and access citizens’ benefits, UK nationals must be able to demonstrate they were settled here before the end of 2020. 

Otherwise, you may only be allowed to spend up to 90 days there (or any other Schengen state) in a 180-day period without a visa.

Remember: you should continue to meet local residence rules to stay under the protection of the Withdrawal Agreement. This generally means having your main home and spending at least 183 days a year in your chosen country, so take care not to potentially forfeit your residence, for example, by spending too much time away in 2021. 

2. Keep your tax planning up to date

Legal residents of Portugal, Spain, France, Cyprus or Malta will almost certainly be deemed tax residents too. Once you are living in your preferred country, your financial planning should be set up for you as a resident. You need to structure your investments and wealth in the most suitable way to minimise taxation – there, the UK and wherever you have financial interests – while still meeting your obligations. 

Tax and financial rules often change over the year, potentially affecting the tax efficiency – or even legality – of your existing arrangements. Schedule in regular reviews so you can stay on top of any developments and take advantage of new locally-compliant opportunities that could benefit you. 

With today’s heightened global tax scrutiny, it is more important than ever to get cross-border tax planning right. Potential penalties for getting it wrong – even unintentionally – can be severe, so take specialist advice for peace of mind. 

3. Revisit your savings and investments

If you don’t already have a financial plan in place for your country of residence, you especially need to take a fresh look at your savings and investments. 

Are they actually better suited to a UK resident? Do they meet your risk/reward appetite? Is your income paid in Sterling and therefore vulnerable to exchange rate fluctuations? Should you take advantage of suitable tax-efficient opportunities for local residents?

Successful investing is about having a strategy specifically based around your personal circumstances, time horizon, needs, aims and risk tolerance. Make sure you have adequate diversification to avoid over-exposure to any given country (including the UK), asset type, sector or company. 

And if you still use a UK-based adviser, bank or other financial provider, check if your relationship or access to services as an EU resident have legally changed now the UK has fully left the bloc.

4. Explore your pension options

With more UK pension freedom than ever – and no one-size-fits-all solution – take your time here. Would you benefit more from leaving UK pensions where they are, or from moving them to a Qualifying Recognised Overseas Pension Scheme (QROPS), for example? Despite Brexit, EU residents can still enjoy tax-free transfers, but the UK government could potentially start applying its 25% ‘overseas transfer charge’ to EU QROPS in the future.

Before making any decisions, take extreme care to do what’s right for you and avoid pension scams with personalised, regulated pensions advice.

5. Review your estate planning

Are you sure your legacy is on track to go to your chosen heirs? Many EU countries, including Portugal, Spain, France, Cyprus and Malta, have ‘forced heirship’. This means certain family members are automatically in line to inherit a specific portion of your worldwide estate, whatever your actual intentions. While you can override this by applying the EU regulation ‘Brussels IV’ in your will, take care to first understand the pros and cons. 

Check also that your estate plan is set up to achieve your wishes in the most tax-efficient way possible. If you remain UK domiciled – as many expatriates do – you continue to be liable for UK inheritance tax, so plan how to reduce this liability for your heirs. And make sure you know where you stand regarding succession rules anywhere else you have assets and/or heirs.

Consider also if any changes in your personal and family circumstances mean you should adjust your arrangements. Have you recently welcomed any new family members or will 2021 include major life events, such as retirement or a divorce in the family, that warrant a rethink of your plans? 

To bring all these complex resolutions together and avoid missing out on any suitable opportunities, take expert, cross-border advice. An experienced adviser with in-depth knowledge of the local tax regime can help ensure you and your family are in the best position to enjoy a prosperous 2021 and beyond.    

Arrange to speak to your local Blevins Franks adviser

The 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.