Moving Abroad: A Financial Checklist
Since the EU referendum, emigration from the UK has been steadily increasing, reaching a ten-year high last year. 84,000 British citizens left the UK for other EU countries in 2019, up 30% since 2016. Moving abroad is an exciting step, but good preparation is essential for a smooth transition. Here we’ve compiled a list of a few things to think about before you leave.
What is your tax status?
Tax requirements when leaving the UK are not always straightforward. It’s important you notify HMRC of your departure if you are leaving permanently or will work abroad for at least one year. Unfortunately, this cannot be done online, so ensure you leave ample buffer time to account for postage. You can do this by filling out a P85.
Whether or not you pay Income Tax or Capital Gains Tax in the UK depends on your UK residence status. You are automatically a resident if you spend more than six months of the year in the country. Residents must still pay tax on anything they earn in the UK or abroad. Most sources of foreign income must be reported with a Self-Assessment tax return.
If you are a non-resident (meaning you spend more than 183 days outside of the UK or work abroad full-time), the general rule of thumb is that you must only pay tax on income derived from the UK.
The UK has agreements in place to prevent you from paying tax in two countries. However, it’s important to familiarise yourself with tax requirements in your new country of residence – you could pick up some considerable fines, or even risk imprisonment if local tax rules are not met.
National Insurance and State Pensions
If you are planning to return to the UK or would like to receive a state pension in the future, continuing to pay your National Insurance Contributions (NICs) might be a good idea. Although you are not required to pay NICs when living abroad, this can protect your pension should you choose to return.
You can still receive a state pension should you be living abroad when the time comes. However, remember that if you live between two countries, your state pension can only be paid into one bank account or building society.
Ensuring you are covered for all your medical needs is essential before you leave. If you’re moving abroad for good, then you will no longer have access to healthcare on the NHS. Depending on your new country of residence, once you are legally registered to work and make national insurance contributions, you will be eligible for state healthcare.
In countries such as the US, where healthcare is not universal, purchasing good health insurance is important. Government subsidised Medicare and Medicaid only cover over 65s, some specific medical conditions and those in particularly difficult economic circumstances.
Do bear in mind that after the UK’s exit from the EU on 31st December 2020, EHIC cards will no longer cover healthcare for UK residents living in the EU.
Think about your property
Many people choose to rent out their property when they move abroad, whilst others may sell-up entirely. If you do decide to become an overseas landlord, rental income over a certain threshold is liable to be taxed. Finding an agent to oversee your property whilst you are away may give you some peace of mind and ensure that you won’t be constantly returning for maintenance issues. If you decide to sell up whilst you are abroad, then you will still be subject to Capital Gains Tax.
Talk about savings
There are plenty of hidden costs to be aware of when moving abroad. Visas, removals, customs duty charges and storage can all add up, so it’s worth having an open conversation about your savings. You might consider having six months-worth of living costs reserved in case of emergency.
If you are thinking about moving abroad, or you are planning your return to the UK, then speaking to a financial advisor might be a good place to start. If you would like to talk to a member of the team here at gpfm, please don’t hesitate to get in touch over email email@example.com or call 01992 500 261.
This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested.
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