David Howell highlights the key areas that should be explored with an adviser when moving abroad
Many more people in the UK are choosing to live abroad these days. Studies undertaken by the Institute for Public Policy Research indicate there are 5.5 million British-born people living overseas. With cheaper transport systems and online communication bringing down the barriers, the attraction has been growing.
At the same time, opportunities for people to work abroad have been opening up considerably in recent years. As an example, Qatar's winning bid for the 2022 World Cup will require a massive influx of professional and skilled workers into the country to develop the infrastructure needed to host the competition.
Some reports suggest that about one in four people born in the UK will either live or work overseas in their lifetime. For clients, taking the decision to move abroad - whether on a permanent or temporary basis - can be both an exciting and a daunting prospect, especially if it is to a new and unfamiliar country.
In every respect, not least in terms of financial planning, good preparation is the key to making that move successful. Guardian Wealth Management began offering advice on an international basis because many of our clients were taking up employment abroad, mainly in Brussels for the EU and UN.
As a result, we have gained considerable experience of helping clients join the expatriate population. Below are some practical points arising from our experiences that are not always factored in by clients when they take that step abroad:
• Clients often assume that because they have existing health and life insurance, especially from global brands, they are covered anywhere in the world. Not necessarily so. It is important that all health and life insurance is reviewed to ensure it will still be valid in the new country of residence.
Actuarial figures around mortality and morbidity rates can differ significantly between countries. Therefore, it cannot be taken for granted that a policy taken out in the UK will provide the same level of cover elsewhere in the world. The likelihood is that the cover will be negated. If clients intend to move around the globe, then a flexible international insurance policy will likely be their best option.
• Opening a new bank account as a first priority in the country of residence will help with access to funds and reduce the costs of doing bank transfers and withdrawing money. Transfers can incur costs of £20-£30 from UK banks, as well as charges of about 0.5% by the receiving bank, so organising finances particularly to cover the first few months in the new country are essential to minimise such charges.
• As with insurance, it cannot be assumed that a will drawn up in the UK will be recognised in the country in which the client is now resident. Legislation varies considerably, for example, French law does not recognise trusts. It is important to have a will in both jurisdictions. This is particularly so if holding assets in the UK and in the new country of domicile.
• If moving with an employer or to join an overseas company, then a review of the company's terms and conditions, especially in respect of pensions, will be required. Pension rules in the new country may not be as expected. It is essential that a holistic view of retirement saving is undertaken and that the client understands the options open to them.
• Before leaving the UK, it is important that HMRC is informed and that the self assessment form is completed accurately and on time. This is to ensure that the client is taxed correctly, particularly on existing bank accounts and any buy-to-let properties, and to avoid any late submission fines.
• Above all, whether the move is permanent or temporary, it is a major change in an individual's personal economic system and requires a comprehensive review of their finances and insurance cover.
• Clients should also familiarise themselves with the tax system of the country they will be residing in and other main laws, especially concerning personal freedom.
Our essential piece of advice to clients is always ‘Plan, Plan, Plan'. Clients need to give themselves enough time to fully organise their move. There can be a lot of red tape to wade through and the longer they have to deal with all the necessary arrangements, the easier and smoother the move will be.
David Howell is group chief executive at Guardian Wealth Management
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