Top 5 financial questions to ask before moving abroad
by Alexander Beard, on Jul 4, 2014 10:28:50 AM
The decision to move abroad is probably one of the most exciting you will ever make, but it will come as no surprise to learn that there is plenty to sort out before you leave, not least of all when it comes to your finances. It is common to have questions about the processes involved, even if you have already made the decision to move and so, below, we have addressed some of the most common areas for concern.
1 - What about my pension?
There are several options when it comes to deciding what to do with your UK pension, with the most common involving a Qualifying Recognised Overseas Pension Scheme (QROPS) transfer. QROPS basically moves your pension to your new country of residence (or another country where you can easily access it) in the most tax efficient way possible. Be careful though: QROPS isn’t always the best solution for all countries or all emigrations, so seek impartial expert advice before you agree to a transfer.
2 - What will my tax situation be?
Assessing your tax situation in your new country of residence is vital to estimating your income, which will obviously be key to your lifestyle in your new home. As with the UK, your tax situation will depend on several elements, including your employment situation, your earnings and your residence status. Again, it’s useful to consult an expert to make sure questions in this area are answered definitively before you move.
3 - What happens to my estate when I die?
In the UK it is estimated that many more estates will have to pay inheritance tax over the next few years*. With this being the case it is vital to assess your inheritance position both in the UK and abroad: will you have to pay inheritance tax in both and can this be mitigated by better organising your estate before you leave the country? Planning now can save your family a huge amount of cost and worry in future.
4 - In an emergency, will you be able to access your reserves?
The unexpected happens to everyone and, at home, accessing extra cash might be as simple as ringing your bank. Depending on what you are doing with some of your savings and investments though, it is vital to have an idea of where the money will come from if you do need it suddenly. If you are not moving your investments, will you still be able to access your UK funds quickly and easily from your new country of residence?
5 - What extras do you need and have you factored them into your projected costs?
The most obvious example here is healthcare. Whilst we have the NHS in the UK many countries do not operate a similar system and health insurance can be expensive in many territories, particularly if you are approaching retirement age. That, though, is just one example. A move overseas can involve many unforeseen costs. You might never be able to plan for them all, but sitting down to establish a formal financial plan can help to reveal many costs you might not have yet considered.
The Financial Conduct Authority does not regulate tax advice.
*According to The Telegraph online.