advisers should consider becoming an expert on the tax position in a specific country or region, opening up more business opportunities
I was struck by a recent news report about the popularity of the Place in the Sun exhibition at the NEC in Birmingham at the end of September, which talked of traffic chaos with queues forming before the exhibition opened.
There is no doubting the appetite among Brits for somewhere warmer to go to at retirement, but is it more an appetite for discussion at dinner parties or a real customer desire?
Official figures show 256,609 homes were owned abroad in 2003/04, up from 176,482 in 1999/2000 - an increase of more than 40% - with the most popular European locations being Spain and France. My feeling is these numbers will continue to grow.
So, what does this mean for those giving financial advice? And to what extent does a fact-find process capture an intention, no matter how well thought out, to move abroad at some stage in the future such as retirement?
Unless intermediaries ask this question it may be they will recommend an onshore bond, when a better 'future-proof' strategy may be to have an offshore one.
I am sure one of the barriers to recommending an offshore bond is that advisers are concerned they will be put in a position where they are asked to comment on taxation in another country, which may well be outside their experience. Not an unreasonable fear given the number of countries there are.
Despite these reservations, the offshore bond should be given full consideration and, fortunately, there is help at hand from Ailo.
An onshore bond is liable to tax on the funds and that tax cannot be offset or reclaimed against the local tax, that is the tax in the new country; while an offshore bond does not deduct tax and is therefore more tax efficient.
Ailo has produced a series of tax guides outlining the position in respect of the main taxes in a number of popular retirement destinations. However, these can only be a general starting point and arrangements for clients, at the point they are retiring abroad, can be very complex.
That is when the role of the adviser in co-ordinating work with other professionals, just as is often the case over other complicated financial planning issues, can come into play. There are many firms of accountants who have offices worldwide, who can help prepare an appropriate plan.
And in the future it may well be an adviser becomes expert on the position in one country or geographical area, opening more opportunities to enhance the standing of their practice.
Future-proofing clients' plans, enhancing your network of professional connections and even developing a specialism within your organisation can all come about from asking clients if they intend to retire abroad. This could lead to some nice work, if you can get it.
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