Living overseas as a UK expat can present some exciting possibilities. Travelling abroad might open up additional investment opportunities and give the ability to experience a lifestyle distinct from that in the UK. If you want to leave the UK, these crucial factors are essential to keep in mind, whether you are just planning on moving or will be residing abroad.
The right financial help for UK expats
Firstly, it’s important to ensure you work with a specialised financial adviser, such as a Brite. Your finances may be more complicated if you live overseas, partly because of regulatory differences in whatever country you settle in and the large variety of financial products that are often accessible.
Overall, engaging with a qualified financial adviser with solid knowledge of the various tax and financial concerns that can occur if you live and work abroad is crucial. Brite can provide you with transparent, expert financial advice you can trust.
Currency risks for UK expats
A significant risk of living abroad is that you might put yourself at the discretion of currency market changes, especially if you plan to invest, buy property abroad, or need to keep up with payments to the UK. This may require transferring or receiving money internationally.
There’s a chance you might be getting a pension or regular rent payments from a UK property that you own. You should try to ensure their value doesn’t fall due to fluctuating currency rates, as these will be paid in pounds.
It is essential, therefore, to organise your finances in advance and utilise forward contracts. One step you may take is to use a specialised currency service. But keep in mind that, due to new Brexit restrictions, certain British banks might not hold your account if you live abroad. As always, to fully understand your options, research is essential. This also applies if you return to the UK after spending time abroad and transferring investments or funds.
How Taxes will affect UK expats
The effects of living abroad on UK taxes can be complicated for UK expats. Careful planning is essential to ensure you’re paying the correct UK taxes and taking advantage of the financial opportunities open to you as an expat.
The most important things to be aware of are your domicile status and place of living. They affect how your UK tax is calculated. Living abroad, for instance, may exempt you from UK income tax, but your global assets, including any overseas real estate, may still be subject to inheritance tax.
QROPS and pensions for UK expats
A pension scheme is a tax-efficient savings plan that usually forms a core component of an investment portfolio and is intended to provide an individual with income later in life.
Pensions can exist in various forms and can be administered by an employer or the investor. A QROPS (Qualifying Recognised Overseas Pension Plan) is a wrapper that permits a non-resident to transfer a UK pension out of the UK and take advantage of a variety of financial perks.
Essentially, QROPS is suitable for expatriates with sizable UK pensions and can offer advantageous investment alternatives, although those have decreased in recent years. You can learn more about QROPS here.
Due to the actions of unregulated advisers, QROPS have recently been the subject of unfavourable headlines, which is why if you are interested in a QROPS, you should use a trusted financial advisor such as Brite. QROPS should never be dismissed; it will always be a viable option, especially if you don’t intend to return to the UK.
Using an International portfolio as a UK expat
It should come as no surprise that taking a global perspective while investing can greatly expand the breadth of a UK expats portfolio. Ultimately, broadening your horizons allows you to look at all asset classes, not just those in your own nation. If you can diversify your investments, you can benefit from expanding marketplaces.
However, the possible alternatives with a worldwide portfolio can seem intimidating. More diversification will help you build a more stable portfolio. Brite has a global perspective on investing and thanks to our Brite Platform, we fully utilise this global perspective.
Real Estate options for UK expats
Many UK expats decide to keep their UK property while living abroad. Maintaining ownership of the family home enables you to earn money by renting it out while you’re away. Plus, programmes like the Non-Resident Landlord Scheme make it easier for you to do so tax efficiently.
Maintaining your residence in the UK also gives you a place to return if and when you decide to revisit the country.
Although holding real estate (whether in the UK or abroad) as part of your investment portfolio is an appealing option for many, real estate can also play a broader function in your portfolio. This is because, compared to stocks and shares, it is a far more tangible asset. Inflation, rising interest rates, and stock market volatility can all be tempered by property.
Banking as UK expat
UK expats having a local bank account in their new country of residence makes sense, as we all need to bank for daily necessities. HR departments can help set up bank accounts if you get a job abroad. But if you don’t have a job overseas and plan to retire abroad, this is still an important step you might have to take on your own.
It is possible to use a third country for banking purposes, and this also has several advantages, including more currency options and more straightforward international money transfers.
Yet bank deposits typically aren’t an investment. Bank deposits nearly always either pay less than inflation and you will naturally be taking a larger risk than necessary by retaining your money in whatever the currency of your new nation is.
Writing a valid Will
As a UK Expat, plenty of reasons exist to have a valid will in place. To adequately protect your possessions, writing a Will in both the UK and the nation where you reside makes sense, as different countries have different rules around inheritance, property and tax.
You will need to write a Will that protects your assets as much as possible and ensures that your wishes are carried out regarding your estate, as otherwise, your assets may not end up going where you want them to.
At Brite, we have helped thousands of UK expats and other people who reside overseas in Australia, South Africa, the UAE, and beyond. We help create financial portfolios and maintain them over an extended period of time.
Wherever you are in the globe, our goal is to establish enduring, trusted connections with you to better understand your needs and provide you with competent, honest advice tailored to your particular situation. Contact us here to learn more.
