If you are returning to live in the UK, or moving to a new country, do not risk leaving it too late to seek advice on the most tax efficient manner in which to hold your assets.
What does 2015 have in store for you? For some British expatriates, it will be the year they return to live in the UK, or perhaps move on to a completely new country.
Even if you have no expectations of returning to the UK right now, you cannot know what the future will hold. In our experience, many UK nationals do eventually go back, for example, when grandchildren come along and they wish to be closer to family, or after the death of a spouse.
Too many people leave it until they have become resident in their new country before seeking advice on the most tax efficient manner in which they should hold their assets and investable wealth. If they are lucky, in certain jurisdictions this does not create too much of an issue, but in others waiting until after they have become tax resident could mean they miss out on the most tax effective solutions.
British expatriates returning to live in the UK may be able to take advantage of their current non-UK resident status to carry out tax and wealth management prior to their return, so that once back in the UK they can enjoy tax advantages which would not be ordinarily achievable by UK residents.
By taking appropriate advice before you return to the UK, you could arrange your investable assets in a manner where you can enjoy tax-free growth and income as a UK resident, irrespective of how much money you invest. Other than the limited National Savings Certificates, Premium Bonds and annual ISA allowances, other mainstream UK investments available to UK residents do not come close to the tax benefits that returning expatriates can enjoy, as long as they plan early enough before their return.
You would also need to consider your pension funds, particularly if you have a Qualifying Recognised Overseas Pension Schemes (QROPS).
The old adage is always true – it is never too early to start planning.
If you do end up returning to the UK for one reason or another, you may find you have limited time to put the necessary appropriate tax and wealth management arrangements in place. So to give you peace of mind, you can take advice and review your financial planning now, to ensure it is structured in the best possible way should an unanticipated move take place.
You may find that by doing so you have improved your tax position here in current country of residence, so that you are already protecting your wealth from unnecessary taxation.
It is therefore essential to take advice from someone who has in-depth knowledge of both your country of residence and UK tax regimes, and how they interact. Most advisers only deal with one or the other, but at Blevins Franks we keep up to date on tax in the UK, France, Spain, Portugal, Cyprus and Malta.
The key to making this planning most effective is to start as early as you can, even if you do not yet know when you will return to the UK. If you do not return to the UK but have improved your overseas tax position, that is a bonus.
We are becoming more transient these days and it is common for British expatriates to leave the UK, settle in one country and then subsequently move onto another. Are there any implications if, instead of returning to the UK, you decide to move to another country? Just as some of the most effective ways to save tax for those who return to the UK should be established before they go, the same applies to people who change their plans and move elsewhere. It is a case of planning before you move – effective tax planning is all about flexibility and adaptability.
Seek advice from an international tax and wealth management company, who can provide up to date information and guidance on the country you are moving to. Blevins Franks has offices in Spain, France, Portugal, Cyprus, Malta and the UK.
You may never return to the UK yourself, but what happens when your money does?
Most British nationals retain their UK domicile even though they may have lived overseas for many years. If HM Revenue & Customs can find evidence to create and support a view that you had an intention of returning – even though you did not – it will assess your worldwide estate for UK inheritance tax. This is a complex area where you need specialist advice to avoid or mitigate the inheritance tax liability for your heirs. Blevins Franks provide a comprehensive domicile determination service and have vast experience in this area.
Even if UK inheritance tax is not an issue for you, your money will eventually find its way back to the UK if your heirs and beneficiaries are UK resident. You may be able to plan for this during your lifetime while you are an expatriate, to ensure that after your death your assets are held in a tax effective manner for your family and any other beneficiaries who you may wish to benefit from your estate.
Whether you are moving back to the UK or to a new country, or want to protect your heirs from tax, it is never too early to seek specialist advice. Do not risk missing out on valuable tax planning opportunities.
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; an individual is advised to seek personalised advice.