Moving abroad? 5 ways to sort your finances first
Simon Lyle | June 7, 2019
Time to read: 5 minutes
Picture the scene… you’re sitting outside your new home as the sun dips behind the hills in Provence, or disappears behind the Barcelona skyline or beyond a temple in Thailand.
Many of us have dreamt of life in sunnier climes at some point, or perhaps Iceland is more your thing, but if you’re getting serious about making that a reality there’s a lot to consider and some really important steps to take.
And we don’t just mean surfing through property sites, stocking up on sun screen and expanding your summer wardrobe.
Top of your to-do list before you go has to be sorting out your finances so that you know you can fund the lifestyle you’re hoping for.
Do your homework to make your new home work
Think of how much preparation and thought goes into going on holiday or moving house and you’ll appreciate what moving abroad could involve.
Your new home, work, cost of living, healthcare and how the move could affect your Will all need careful consideration. Even setting up a simple bank account can be more complicated, depending on where you choose to move to.
Thankfully there’s a wealth of information to get you started on the government’s living abroad webpage covering everything from documents and driving to taking your pets with you – as well some important financial guidance.
Take the stress out of your money matters
It’s important to understand how moving might affect the pensions, savings and investments that you’ve built up while living in the UK as these are usually intended for UK residents when you set them up.
If you want to make your move as stress-free as possible, here are five things you need to think about.
1. Do your research first
One of the most important things is to do your research and understand, before you move abroad, how moving will affect your finances. It could save you time and money.
2. Find out how your savings and investments are affected
If you have set up something like a pension in the UK it will be intended for people living here. Moving abroad will affect what you can and cannot do with the money in it.
Things that you might take for granted at the moment, such as paying in or withdrawing money, or taking out a new pension plan, may not be quite as simple when you have moved.
While personal or workplace pensions can usually be paid to you wherever you live there could be additional costs involved or your income might rise and fall with changes in exchange rates, depending on how and where your pension is paid. In some cases you may want to consider transferring to a new plan, though you should seek financial advice before doing this.
If you are planning to leave some or all of your savings and investments behind in the UK you’ll need to consider how the tax treatment of these investments in your new country of residence might affect your money too.
So, make sure anything you have is in the right place before you move. If in doubt, speak to your provider for help and information about your specific circumstances.
3. Get tax savvy
When you’re researching the country you’re planning to move to, check out what the position is there in terms of income tax and inheritance tax. The UK Government’s website has information on paying tax on your UK income if you live abroad.
4. Check if your State Pension will still increase
You can usually still claim your State Pension if you live abroad. However, if you live in the UK your State Pension usually rises to keep up with the cost of living each year and this may not continue depending on which country you move to.
Head to Florida and you currently get an annual rise but while the UK has social security agreements with Canada and New Zealand, you don’t get a yearly increase in your UK State Pension there, explains Gov.uk.
5. Get the right advice
Keeping on top of tax laws across two countries and how your savings and investments might be affected by moving can be complicated, so you should speak to an adviser who understands the financial aspects of living abroad, ideally one who knows about the country you’re considering moving to.
Although it will cost you, good advice could save you money and a lot of worry in the long run. If you don’t already have an adviser, check unbiased.co.uk to find one in your area or visit 1825, for financial planning from Standard Life*.
While there’s a lot to think about, the excitement of a new life in a new country is still a huge draw and the most recent official figures show that more than 750,000 Brits are living in the EU – and some estimates put the number far higher.
One person who hopes to add to that figure in the near future is Niki Hutchison, who owns and runs The Simplicity Concept, a marketing consultancy that supports ambitious female founders. And she has some simple advice for anyone looking to head to that place in the sun.
“I would love to live abroad in my fifties, somewhere like Ibiza. It’s so easy to get swept up in the idea of it, but it’s also really important to prepare your finances before you go, especially any pension or savings you have.
“I’ll certainly be making sure I do my research about the country I choose, whether that’s Spain or somewhere else. It’s not a holiday and you need to get the right advice before going to live anywhere.”
It’s important to note that laws and tax rules may change in the future and your own personal circumstances and where you live will have an impact on tax.
Please remember that Standard Life’s UK and offshore products taken out in the UK are aimed at UK residents. Living abroad can have an impact on what you can and can’t do with that product after moving abroad. No matter where you live, investments can go down as well as up and may be worth less than was paid in.
This article shouldn’t be taken as financial advice and is based on our understanding in June 2019.
* ‘1825’ is the brand for Standard Life Aberdeen Group’s UK financial planning and advice business.