This article provides an overview of some areas that your clients should consider before moving from the UK.
Consider the formalities
Your client’s choice of destination will decide what, if any, formalities need to be considered before settling on a new home abroad. For example: Visas or residency checks.
Generally, if your clients have decided on a new life within the European Union (EU), then this can happen with few formalities - due to the freedom of movement within the EU.
However, if your clients decide to move outside of the EU then it is important to consult the British Consul to discuss the requirements for entry into their proposed destination.
UK state benefits
For clients who are receiving UK State benefits and intending to move to another country in the European Economic Area (EU and Norway, Iceland and Liechtenstein) or Switzerland, then they may be able to continue to receive certain welfare benefits or qualify for equivalent benefits in their new country. The Foreign & Commonwealth Office has produced a leaflet which provides more details, entitled ‘UK benefits: if you’re going or living abroad’.
Outside the EEA your client may not be entitled to continue receiving state benefits. It may be possible, where your client is moving to a country where the UK has a reciprocal social security arrangement, for them to continue receiving their benefits. The UK has reciprocal social security arrangements with Barbados, Bermuda, Canada, Guernsey, Israel, Jamaica, Jersey, Mauritius, New Zealand, Philippines, Turkey, USA and the former republics of Yugoslavia. Further details can be obtained from the Department and Work and Pension.
These benefits will also be dependent on your clients’ previous residencies. They must have been UK resident for at least five tax years before moving abroad to benefit in order to continue receiving benefits.
It is essential that HM Revenue and Customs (HMRC), as well as the Department of Work and Pensions are informed of your client’s departure abroad.
Taxation home and abroad
Leaving the UK is not enough to escape the UK tax net. If your client moves abroad so that they become a non-UK resident they may still have to pay UK income tax. It is also essential to understand the domicile status of your client and their plans for the future. In particular, inheritance tax is an on-going concern for the UK expatriate and therefore should ensure appropriate planning is in place to mitigate any on-going liability. For further information on domicile please refer to our article ‘UK domicile – the basics’
Existing investments & UK pensions
The tax-efficient investments your client purchased whilst UK resident may not be so suitable or as tax-efficient in their new country of residence. Reviewing the tax status of these products in your client’s new home country would be prudent and may lead to reviewing their existing portfolio of investments and changing them for investments which suit the new countries tax regime or currency.
UK pension provision should also be reviewed to see how suitable it is within the new jurisdiction and whether there are more flexible options available.
You are likely to have discussed succession planning, in the UK, with your clients. Before they move abroad it would be prudent to revisit this with them because some countries may not have the same type of legal system as the UK, this could lead could lead to a conflict on the death of your client. Existing Wills and trust arrangements should be reviewed to ensure your client’s wishes are followed in the country they move to. For more information on succession planning when moving abroad please refer to our article ‘Succession planning – cross border issues’.
Moving abroad can be difficult, stressful and life changing. Helping your client to understand the financial impact before and after they move abroad will allow them to ensure their financial affairs are fit for purpose in their new home.