Around 123,000 British citizens emigrated from the UK in 2015 according to the Office for National Statistics.
Popular destinations include: Australia, France, the USA, the United Arab Emirates and Canada.
Many leave for work-related reasons and to move closer to family or loved ones.
Thousands of people decide to move abroad every year and finances are a big consideration when making the leap. With such a big decision, it’s worth taking the time to visit the country you want to move to before making a long-term commitment. Also, ensure that you meet all the immigration and visa rules before becoming emotionally and monetarily attached to a specific country.
If you’re thinking of working or retiring overseas, there are a number of practical financial considerations to take into account, according to Geraint Davies, the Managing Director of Surrey-based Montfort International which specialises in global financial planning. Every client situation is always different. The key, therefore, is to ensure that your financial planning is ‘conjoined’.
He explains: “Getting a financial plan in place is not a luxury. Moving abroad will always result in a change to your financial circumstances including: personal tax, inheritance tax, pensions, property, savings and investments. Exchange rates will also have an effect on how you plan your finances hence the need for a conjoined plan.”
Here are 6 practical money tips to help with your move abroad.
1. First steps
Take half the stuff and twice as much money as you think you need. This is a travel motto that applies to short voyages and permanent ones. When moving abroad you have to budget for renting or buying a place, flights, removals, storage, visas, legal fees and putting in place an emergency cushion. It is cheaper and easier to only take essentials and consider selling stuff you don’t need – like that battered old sofa – for extra cash before you go. If possible pay off debts. If you are unable to do this contact creditors before you go to avoid any future financial headaches.
2. Cost of living
Moving from the UK to a different country can be cheaper – a city like Berlin is more affordable than London, while South Africa is good value for money but has its downsides, like a higher crime rate for example. Australia, Switzerland and certain Scandinavian countries like Norway are some of the most expensive countries in the world to move to. Therefore it is important to consider the kind of lifestyle you plan to lead in your destination country and if you can still afford to live there comfortably if the exchange rate swings against you.
3. Fix exchange rates
Using something called a forward contract allows you to fix a rate with World First for up to 3 years based on the currency rate at the time of booking and gives you a guaranteed rate at which to transfer. This means you will know exactly how much money you get in the future no matter what the currency market does in the meantime. However, a post-Brexit UK has resulted in a weaker Great British Pound (GBP), which means the pound, doesn’t stretch as far as it did in most cases.
4. How to send money abroad
Using a currency broker, like World First, is a safe, secure and cheaper way to transfer money abroad and, unlike with most banks, UK-based private clients are not charged fees. Independent research shows that someone buying £10,000 worth of euros with World First could get as much as 3% more than they might do with their bank.* You can also set up regular international transfers to pay bills or keep up with commitments and, as global exchange rates are always fluctuating, you can use the currency broker’s free rate alert service.
5. Tax is taxing
Settling your tax affairs between your new home and the UK can be very complicated – especially if you have investments or property. It is worth getting expert advice to help you understand the rules better and to ensure that you are not paying tax twice when retiring or working abroad. Research the tax arrangements of the country you are heading to. What you pay in tax will vary from place to place, and the rules may be slightly different. Also, if you are leaving the UK to live abroad permanently or going to work abroad full-time for at least a full tax year you must tell HM Revenue and Customs (HMRC).
Davies from Montfort adds: “You need to look at this individually and holistically because it is all connected. Some investments that are tax free in the UK, for example ISAs, are not tax free in other jurisdictions like Australia. And when it comes to property you also need to consider what are the best options for you – this might include selling, changing ownership or remortgaging. The timing of your move abroad can reduce your tax liabilities.”
6. Move your pension
Most people who retire abroad have two sources of income: a state pension and a private or employer pension. If you are retiring abroad you need to investigate how moving overseas may affect any benefits or retirement income you receive.
You may be able to transfer your UK pension savings to an overseas pension scheme – known as a Qualifying Recognised Overseas Pensions Schemes (QROPS).
Davies from Montfort says: “For some there are tax advantages to using them but for others a move can cause disadvantages. This is especially true when what you thought was a QROPS wasn’t! As discovered by some when HMRC reduced the number of schemes it recognises recently.
“QROPS are not a financial product, they are a facility made available by HMRC so they don’t suit everyone. When considering transferring your pension ensure you explore all options and get proper holistic financial advice to ensure that the advice is fit and proper. Some overseas firms are notorious for telling you all the positives but rarely those all-important negatives. The advice must be balanced.”
Considering retirement in Spain? Find out more with our guide to retiring to Spain
7. Consider healthcare
Health insurance can be expensive, especially in North America, and unlike the UK most healthcare systems are not free at the point of delivery. If you are moving abroad on a permanent basis, you will no longer be entitled to medical treatment from the NHS, because it a residence-based healthcare system. Therefore, before leaving for your new destination, it’s important to check what health services are available to you in that country. Budgeting for any additional healthcare costs you may face, like regular health insurance payments, is important regardless of how healthy you are.
The content is for general information only and does not constitute investment, tax, legal, medical or other form of advice.
*CALCULATED FROM EXCHANGE RATES AND FEES OBTAINED USING MYSTERY SHOP DATA FROM THE FXCOMPARED INTERNATIONAL MONEY TRANSFER INDEX (IMTI)™ COLLECTED ON THE 15TH MARCH 2016, BASED ON SENDING A TRANSFER OF £10,000 IN EUROS AND SHOWS THE MAXIMUM SAVING (EXCLUDING FEES) WHICH COULD BE OBTAINED BY USING WORLD FIRST RATHER THAN OTHER HIGH STREET BANKS.