This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, it is subject to change and we are not responsible for any errors or omissions.
Around 23% of British people are planning to move overseas within the next 5 years. Reasons for wanting to leave include the high cost of living, the high cost of UK property, and attractive employment opportunities abroad.
If you are thinking of taking the plunge, it is important to plan ahead. In particular, your wealth and finances need special attention to ensure you can support your lifestyle and move towards your long-term goals.
In this guide, our team here at Scottsdale offers some tips on how future expats can best plan for their big relocation. We focus on Spain as an example destination, but many of these tips can apply to multiple countries.
Get in touch to discuss your own financial plan with us via a free, no-obligation consultation.
Try before you buy
If you are thinking of expatriating to a particular country, then it’s a good idea to visit it first.
A holiday cannot fully replicate the “expat experience.” However, it gives you a tangible sense of the lifestyle, amenities, and local customs that you will be navigating as a future resident.
Consider the type of location that would suit you. What sort of weather would suit you, and do you want to be based somewhere urban, rural or coastal?
Infrastructure is also important. Will you have easy access to transport links (e.g. airports), schools, supermarkets and hospitals? Do you have hobbies that need catering to? For instance, if you want to spend lots of time hiking, you may want to avoid a highly polluted city.
Check legal requirements
What type of visa will you need to work, study or retire in a new country?
The Spain Digital Nomad Visa (DNV), for instance, lets a freelancer live in Spain for 12 months initially (if certain conditions are met), and can be renewed for up to five years.
There may be many options, and rules may change between now and your moving date. As such, it’s a good idea to prepare ahead of time as best you can in case you are asked for certain documentation – e.g. proof of financial means, employment history and an up-to-date criminal background check.
Make sure your passport will not expire for a while. Renewing it from overseas is possible, but it can be cumbersome and costly, depending on your location and circumstances.
Financial preparation
If you plan to work overseas, how will you receive payments? If you intend to retire, how will you receive pension income?
It helps to have strong savings before moving overseas to cover various costs. In Spain, for instance, British expats are typically asked to pay a security deposit on a property, which may be equivalent to 1-2 months’ rent.
Account for other expenses such as visa fees, relocation costs, and shipping expenses. Think about what your monthly budget is likely to be. What might you be paying for utilities, groceries and transport?
If you own assets already, what will you do with them? For instance, if you currently own a UK property, will you sell it?
Will you rent out your UK property and turn it into a buy-to-let? If so, how might this affect your repayments and mortgage options? What permissions will you need from your lender?
If you have investments and a pension, will you “take these with you” when you relocate? Or will they continue to be based in the UK? If so, how might your financial plan be affected?
It is important to note that your residency status may change when you become an expat. This can affect your eligibility for tax allowances that you may currently enjoy.
For instance, you may no longer be allowed to contribute to your UK pension or ISA. As such, it is helpful to seek financial advice well ahead of time to address such issues as early as possible – avoiding nasty surprises later.
The long-term
When you become an expat, the world opens up to you. Many people stay in their new country for years. Others (e.g. digital nomads) regularly move.
Whilst you may now have a strong sense of where you want to be and where you want to go, it helps to recognise that your goals may change later.
For instance, if you want to retire to Spain, is there a possibility that you may return to the UK in the future (e.g. to look after an elderly relative)?
These types of scenarios might inform how you construct your expat financial plan. In the above case, it may affect whether you decide to keep your pension(s) in the UK or move them to a new scheme – e.g. an international SIPP (self-invested personal pension) or a QROPS (now known as a ROPS, or Recognised Overseas Pensions Scheme).
A financial adviser can help you engage in fruitful “financial contingency planning” and build a robust long-term plan that accounts for your current goals and gives you maximum flexibility.
If you want to ensure you’re taking the right steps to safeguard your financial future, please get in touch to speak with an expat financial adviser here at Scottsdale.