Before you move abroad you need to work out the financial implications, and this means taking appropriate advice, particularly if there is a good deal of money at stake. The choice of adviser or advisers is crucial. It is unwise to assume that your local bank manager, insurance broker or solicitor is in a position to advise you on expatriate financial matters.

 

Expatriate finance is a complex subject, and the chances of finding an expert in this field in your local high street are slim. However, most high street banks and other finance houses have departments, often based in the Channel Islands, that cater for expatriate customers.You really need to ask around, look in the advertisement columns of expatriate newspapers and magazines (eg Resident Abroad) or ask professional institutes such as the Institute of Chartered Accountants and the British Insurance and Investment Brokers Association to recommend someone.

The directory at the end of this book suggests a few contacts.Good advice does not necessarily come cheap; but on the other hand, not to take good advice could cost you dear. You need to find out how to:A move abroad represents a radical change in your circumstances and your current financial arrangements will probably need a complete rethink.

 

There are three areas that you need to consider in turn:The ideal adviser is a person who can deal with all three, particularly where large amounts of money are involved. However, this is not always possible; an accountant may be able to advise you on taxation, but may have to refer you to someone else for advice on investment and insurance.

Taxation

‘In this world nothing can be said to be certain, except death and taxation,’ wrote Benjamin Franklin. Anyone planning to retire abroad ought to bear this in mind, particularly the bit about taxation.

There is no reason to pay more tax than you need, and if you do not have to pay any at all, so much the better. People who have resided in Britain for most of their lives generally know the rules of the game – about allowances you can make against tax, tax-free investments and so on.

But if you move aboard your tax circumstances may change. You may find that you no longer need to pay UK tax, but you may be taxed by the authorities in your adopted country. Whatever your situation, you will not want to pay more tax than you really need, hence the need to clarify your position at the outset with Inland Revenue booklet IR20: Residents and Non-residents. Liability to tax in the UK.

In the next few pages I attempt to explain some of the ground rules as they exist at present. However, you should bear in mind that at any time the rules may be changed, and that each person’s circumstances are different. Moreover, you will have to accept the fact that you are unlikely to escape paying taxes completely.

The Importance Of Being Non-Resident

Some expatriates believe that once you leave the UK your obligations to the British tax authorities cease automatically. Wrong.

Even if you have decamped to a remote tropical island, you should not assume that you have escaped the clutches of the Inland Revenue. If the taxman decides that you are resident in the United Kingdom, you remain a UK taxpayer.

As you sit beneath the palm tree sipping pineapple juice ask yourself the following questions:

• Am I going to be in the UK for more than 183 days in one tax year?
• Am I going to spend on average more than 90 days a year in the UK over a period of four years?
• Do I plan to spend any time in the UK and have accommodation available for my use (a place of abode) there?

 

If the answer to any of these questions is ‘yes’, add a dollop of gin to your juice and prepare yourself for a shock. In the eyes of the Inland Revenue you are still a UK resident, and therefore a taxpayer. True, the taxman is unlikely to turn up on the doorstep of your beachside villa in person, but he will probably catch up with you in the end.

The third question may need some explaining. If you have a house, flat or just a room available for your use in the UK and you visit the country, you will be regarded as a resident. This remains true even if you do not use the accommodation or only stay in Britain for five minutes.

You may hear of people with property in the UK who have managed not to pay tax to the Inland Revenue. However, their circumstances may be different from yours. For instance, they may have a full-time job abroad, or they may have let their property on a long-term basis.