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.
Moving to a new country is exciting. The expat life brings many wonderful opportunities for career, travel and family. Yet, it also raises complex questions about your finances. Will the cost of living be different and how will you adjust your budget? How does tax work? What are your retirement planning options when living abroad?
Below, our financial planners offer some insights into expat money management in 2024. We hope these insights are useful. To discuss your financial plan with a member of our team, please get in touch to arrange a no-obligation financial consultation, at our expense:
+34 966 460 407
info@scottsdale.eu
Before you relocate
If you are yet to embark on your expat adventure, it will help to plan your finances as much as you can beforehand. In particular, any money you already have should be easy to access both in the UK and abroad. It should also be easy to transfer cash between countries.
Broadly speaking, there are three options for expat banking in 2024:
- Retain your UK bank account(s) and simply make ATM withdrawals overseas.
- Open a local account in your new host country.
- Set up an offshore account.
Option two can be useful for many expats, such as those receiving a salary in their new host country in a different currency. However, this can be difficult to set up initially as many local banks will require credit history and proof of address (which you may not yet have).
Setting up an offshore account can help mitigate some of these challenges. This allows you to keep your money in one place – i.e. a jurisdiction with political stability, favourable tax rates and easy access to finances (e.g. for international transfers).
Planning for family finances
Moving abroad as a single British person can be complex enough from a financial planning perspective. Things often get more complicated when you bring a partner, spouse or children with you! Fortunately, expat families do have a range of options.
Four key areas to think about are education, financial protection, retirement and estate planning. For instance, if you have children, will you have the option to send them to a local school overseas? Will your new employer cover private school costs? Will your children go back to the UK for boarding school and how might you pay for this?
Regarding financial protection, do you have a “safety net” in place should you encounter a life-changing event – e.g. a sudden serious injury or premature death of a partner? Here, a financial planner can help you construct a robust plan which might include income protection, critical illness cover or life insurance.
On retirement planning, will you still be able to contribute to your UK pension(s) if you move abroad? If not, can you participate in a new local scheme? Bear in mind that expats often relocate regularly and can gradually accumulate many small pension “pots” in different countries. A financial adviser can help you navigate complex issues like these – e.g. via an international SIPP (self-invested personal pension).
Finally, regarding estate planning, consider how the expat life might affect your future inheritance tax (IHT) liability. If you build up assets in multiple countries (e.g. cash in regular accounts and property), remember that different jurisdictions will have varying laws about IHT and wealth taxes. Seek professional advice to navigate this area carefully.
Budgeting, tax and other areas
It can be difficult to predict your income and expenses when moving to a new country. It can help to reach out to British expats already living in your target country before relocating. Their experiences could reveal valuable information about costs such as housing, food and utilities.
Consider how your lifestyle might change. If you are moving abroad to work, will your new salary match what you currently earn in the UK? Will that salary stretch as far as before? Perhaps it might have more “spending power” (or less).
Don’t forget about important costs which are often overlooked by expats, such as medical insurance. Your new employer might offer benefits to help with this (via your package). However, be careful to check whether any reciprocal arrangements exist between the UK and your new country. Bear in mind that most countries do not have free healthcare at the point of use, like the NHS in the UK. So, you may need to pay for private medical care.
Finally, remember to research the tax system in your new country and how it relates to the UK. In particular, does your new country have a “double taxation agreement” with the UK? Will you need to pay tax in the UK, your new country or both for various areas of tax – e.g. income, dividends and capital gains?
to gain more clarity on your tax plan, consider seeking professional advice from a specialist financial planner who is experienced in working with expats.
Invitation
If you are interested in discussing your own financial plan or inheritance tax strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:
+34 966 460 407
info@scottsdale.eu