There's a lot to consider if you're thinking about returning to the UK after living abroad. Along with deciding where you want to live and making arrangements to move, there's also the more complicated aspect of your tax and financial position.
Planning ahead can help you avoid nasty or expensive surprises in the future. Before you make your move, these are seven things to think about.
1. Start planning well in advance
Moving is one of the most stressful life events. While you're effectively moving home to a country you know and love, don't underestimate how challenging the move may be.
Planning ahead can help alleviate some of the stress.
Reviewing your financial plan before you move back to the UK can help to minimise taxation and make the most of tax-efficient opportunities.
Many of the assets that you may hold in an offshore structure could cause a tax headache with HMRC. So, before you return to the UK and become a UK tax resident, make sure that any assets and structures you hold are UK tax-friendly.
2. Draw up a budget for life in the UK
Draw up a budget for expected income and outgoings for your new life in the UK. And don't forget to think about costs you might incur when exiting existing financial obligations you have.
Review your regular direct debits and standing orders and make sure you cancel everything you can in good time.
Although it's impossible to plan for every eventuality, work out your expected monthly costs before you move. Include accommodation costs (whether on rent or your mortgage payments), food, fuel, transport, and utility bills. And factor in non-essentials such as entertainment, meals out, or weekend trips away to catch up with family and friends.
Even if you're returning to the UK for work, there may be a period when you aren’t earning, so make sure you have enough money set aside to meet immediate expenses.
3. Check the tax position of your investments
UK tax liabilities depend on your residency status. If you are an expat returning to the UK and have lived abroad for less than five consecutive tax years, you are usually likely to be considered a temporary non-resident by HMRC. If you have lived overseas for more than five years, you will be subject to different tax rules regarding your income and capital gains.
Before you move, make sure you are up to date with your filing obligations with HMRC and that you review all your financial interests, including pensions, investments, accounts, and property.
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 hold until you return to the UK, as you can offset losses against tax.
4. Find out your options for any overseas pensions
If you’ve been contributing to a pension in the country you’re leaving, it may be possible to transfer your retirement savings to a registered UK pension scheme.
Should you already be drawing your pension, you’ll need to find a UK provider willing to accept the transfer and continue the payments in the UK.
With retirement savings in two countries, it’s vital that you’re aware of the different rules and regulations that apply to how and when you can take the money. We are experts in this field. We can help you explore your options and establish steps you should take to protect your retirement savings.
5. Make sure you have the right protection in place
Now is a good time to review what 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.
Along with general household and car insurance, pay close attention to your life insurance. Living costs and expenses may change significantly when you’re back in the UK and it’s important to ensure that your family will be able to cover costs if you’re no longer around to support them financially.
Policies and the cost of premiums can vary greatly between providers. We can help by making sure you get the cover you need at the right price.
6. Review your will to protect your estate
If you have a UK will, check it’s still up to date. If you don’t have one, make sure you write one. Meanwhile, consider any assets that you may still have overseas and make sure these are accounted for.
Since different jurisdictions have different ways of managing your assets on your death, you may need separate wills. Two wills will ensure your loved ones are protected and your assets are distributed according to your wishes.
7. Seek expert help from an experienced planner
With so much to consider, it’s wise to work with someone who understands the financial systems in both the UK and the country you’re leaving.
Getting the right advice is crucial to ensure you don’t fall foul of the more complex investment rules or end up paying unnecessary tax. A good financial planner will help you take advantage of the opportunities and avoid the threats.
Get in touch
We provide tax-efficient and tax-compliant solutions for those who have found a new home overseas and those returning to the UK. Many of our planners have been expats themselves and relocated back to the UK, so they understand the issues you may face.
If you're thinking of returning to the UK after living abroad and want help to get your finances in good shape for the move, get in touch. Email enquiries@alexanderpeter.com or call us on +44 1689 493455.
Please note: The content of this newsletter is offered only for general informational and educational purposes. It is not offered as and does not constitute financial advice.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
A pension is a long-term investment not normally accessible until 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. Past performance is not a reliable indicator of future results.
The Financial Conduct Authority does not regulate Taxation Advice, Estate Planning, Inheritance Tax Planning, Cashflow Modelling, wills or trusts.
