If you’re an expat who has been living abroad for many years, as you age and start to consider retirement, you may be tempted to move back to the UK.
Indeed, according to a report in FTAdviser, the number of older expats returning to the UK has “increased dramatically”. The reasons people decide to move back to the UK vary, but family, Brexit, and the healthcare system are among those often cited.
Moving home is rarely straightforward, and moving countries can bring additional complications that you need to plan for – even if you’re returning to your home country. So, read on to learn five key ways a financial planner could help you protect your wealth and smooth the path to your new life in the UK.
1. Timing your move
When you move matters because it can affect how much tax you may have to pay on your return.
You may not have the luxury of being able to choose the date of your return. But, wherever possible, you should start planning for your relocation a full tax year ahead of your move back to the UK.
Indeed, returning to live in the UK on or shortly after 6April – the beginning of the UK tax year – could make life a little less complicated.
Typically, the longer you have been living abroad, the more money you might have accumulated and the more complicated your financial situation.
Whatever your circumstances, reviewing your financial plan before and after you move back to the UK can help you minimise taxation and make the most of tax-efficient opportunities.
Before you return to the UK and become a UK tax resident, we can help you understand the tax implications of making the move. Speak with us well ahead of your move and we’ll help you to time your return and give you the best chance of avoiding a nasty “welcome home” surprise from HMRC.
2. Sorting out your assets
Should you need to sell assets before your move – including stocks and property – it’s usually sensible to plan this carefully.
If you have lived overseas for more than five years, you will be subject to different tax rules regarding your income and capital gains. So, if your investments have appreciated in value, you might want to consider selling them ahead of your move to realise gains before returning to the UK.
Likewise, if you’ve made a loss, you might want to wait until you return to the UK, as you can offset losses against tax.
Once you’re back in the UK, you may want to start building or rebuilding assets using tax-efficient structures like ISAs and pensions. Every UK resident over 18 can open an ISA and save up to £20,000 (2023/24) a year free from tax.
If you’re an employee, you should automatically be enrolled into a workplace pension. You could also set up a self-invested personal pension (SIPP). Either option means your contributions will receive tax relief at your marginal rate of Income Tax.
Read more: 5 top benefits of using a SIPP for your retirement savings
We can help you understand your full financial picture, allowing you to return to the UK with confidence, knowing that your wealth will be protected and managed effectively with tax-efficient solutions designed for your new life back in the UK.
3. Transferring your pensions
If you’ve been contributing to a pension in the country you’re leaving, a financial planner can help you figure out the best approach to consolidating your pensions. They can also ensure that your retirement savings are invested according to your objectives and tolerance for risk.
While it’s possible to transfer an overseas pension scheme into a registered UK pension scheme, you’ll need to check the terms of the pension scheme you want to transfer into.
Read more: Pros and cons of combining your pension pots. Is it the best move for you?
There may be situations where you struggle to find a pension provider willing to accept the transfer. In situations where money is arriving from another country, the pension provider is likely to need to carry out anti-money laundering checks to verify the source of the funds being transferred.
If you have already started drawing on your pension while living overseas, this may add extra complications. In this case, you’ll need to find a UK provider willing to accept the transfer and continue the payments in the UK.
Pensions and retirement planning can be complicated. And, if you have retirement savings in two countries, it’s vital that you’re aware of the different rules and regulations that apply. This is especially important when it comes to understanding the rules around how and when you can take the money.
4. Putting the right protection in place
Moving back to the UK is a big life event, so it’s sensible to take a good look at the cover you have in place and what you might need to make sure you and your family will be financially protected, should the worst happen.
For general insurance, check price comparison sites and factor costs of car insurance and home insurance into your household budget.
To protect your long-term wealth in the event of ill health, a financial planner can advise you on income protection insurance, health insurance, and critical illness cover.
By providing a cash safety net to help your family keep paying the bills, life insurance can help remove the burden of money worries at a difficult time.
With policies and the cost of premiums varying greatly between providers, we can help make sure you get the cover you need at the right price.
5. Ensuring your income meets your needs
Living costs and expenses may change significantly when you move back to the UK. So, make sure you draw up a budget for expected income and expenditure in your new home.
While it may be impossible to plan for every eventuality, it’s wise to have an idea of your expected monthly costs before you move. If you’ve been away from the UK for many years, do your research and figure outliving costs for the area you expect to move to.
Having a sound budget will give you peace of mind andreassurance that you have the necessary funds to maintain the lifestyle youhope to enjoy when you return to the UK.
We can use sophisticated cashflow modelling to project yourincome and expenses into the future. And, to give you a realistic measure,we’ll also consider moving parts such as inflation, taxation, and lifeexpectancy. This will help give you a more accurate picture of what lies aheadand build a robust financial plan to help you work towards everything you hopeto achieve.
Speak to an expert at Alexander Peter
With so much to consider, it’s important that you work withsomeone who understands the financial systems in both the UK and the countryyou’re leaving. Getting the right advice is crucial to ensure you don’t fallfoul of the more complex investment rules or end up paying unnecessary tax.
Alexander Peter provide specialist advice to British expatsand international employees living around the world.
We provide tax-efficient and tax-compliant solutions forthose who have found a new home overseas and those returning to the UK. Plus, manyof our planners have been expats themselves and relocated back to the UK, sothey understand the issues you may face.
Get in touch
If you're thinking of returning to the UK after livingabroad and want help to get your finances in good shape for the move, please getin touch.
Email enquiries@alexanderpeter.comor give us a call on +44 1689 493455.
Please note
This article is for general information only and does notconstitute advice. The information is aimed at retail clients only.
Please do not act based on anything you might read in thisarticle. All contents are based on our understanding of HMRC legislation, whichis subject to change.
The Financial Conduct Authority does not regulate cashflowplanning or tax planning.
A pension is a long-term investment not normally accessibleuntil 55 (57 from April 2028). The fund value may fluctuate and can go down,which would have an impact on the level of pension benefits available. Pastperformance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based onyour individual circumstances. Thresholds, percentage rates, and taxlegislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pension Regulator.
Note that life insurance plans typically have no cash invalue at any time and cover will cease at the end of the term. If premiumsstop, then cover will lapse.
Cover is subject to terms and conditions and may haveexclusions. Definitions of illnesses vary from product provider and will beexplained within the policy documentation.
