4th July 2017 at 9:32am
You’ve finally made up your mind to do what you’ve always dreamed of – to move abroad to sunnier, drier climes or take that dream job on foreign shores.
Of course, you’ll be focused on all the practical aspects of such a move – selling your home, finding somewhere to live out there, checking out healthcare provision in case you need, catering for any pets, and so on. But what about your savings – how will they operate once you’ve left the UK?
You’ve worked hard over the years and may have built up savings in a deposit account, a pension and an ISA, bonds and unit trusts. Will you be able to continue to pay in, take money out and be taxed as normal when you move abroad?
There’s every chance you won’t be able to, so it’s just as important to get your savings sorted out before going abroad as it is to sort out all the practical aspects.
ISAs, for example, can’t be topped up once you’re abroad; although you can still keep them going and they continue to benefit from the UK tax breaks. Pensions, unit trusts and bonds can be topped up but only in some circumstances – For example, if a pension, it depends on the type pf pension and provider. But, again, you’ll be able to keep them up and running and the pension will still benefit from any UK tax breaks.
More importantly, particularly in light of the recent pension freedoms, you need to make sure that your products will operate the way you need them to after you’ve moved.
Let’s look at an example. You’ve had a pension for a number of years, you’ve moved abroad and you now want to start drawing money out. However, your pension provider confirms that the type of pension you have doesn’t offer that flexibility so you’ll need to transfer your pot to another provider. Unfortunately that’s where you’ll start to have a problem. By transferring, you are opening a new product and most UK providers are not authorised by the regulator to offer a UK product to a non-UK resident. You may find that your only option will be to buy an annuity.
A three-point plan for your finances
You can avoid this happening by making sure you sort out your savings before you move abroad. Get them into the right home for your future needs.
Here’s our step-by-step plan to help you:
1. Check your financial product has all the flexibility you think you’ll need in the future – if it doesn’t, move it to somewhere that does.
2. Check with your provider whether they will allow ongoing payments.
3. As part of your planning, check what tax could apply to your UK products in your new country of residence and also when you come to take money out of them.
Remember you may need to take professional advice to manage your tax.
Make it a dream move
If you’re fortunate enough to make your dreams a reality then make sure you act in good time. Make it a marvellous move by having your finances sorted well in advance; it could be too late once you’ve gone.
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The information in this blog or any response to comments should not be regarded as financial advice. A Stocks and Shares ISA and a personal pension are investments. Their value can go up or down and may be worth less than you paid in. Laws and tax rules may change in the future. The information here is based on our understanding in September 2015. Your personal circumstances also have an impact on tax treatment.