If you’re planning to move abroad you will need to get your finances in order. Here are our top five tips to help you make the most of your money.
One of the most important parts of moving abroad is getting your finances in order. This certainly isn’t the most exciting aspect of planning an overseas move but absolutely can’t be overlooked. Knowing your tax implications and responsibilities, understanding exchange rates and money transfer fees, setting up payments to pay for expenses back in the UK, arranging bank accounts in your new location and setting up pension payments (if required), all need to be addressed before the big move. Here are five financial matters to consider before moving abroad.
Contacting a tax professional and financial advisor is recommended when planning a move abroad.
1. Know your tax status
You hope to love your new country, but probably don’t want to pay more tax to it than you need to. Fill out a P85 form from Revenue and Customs and submit it to the HMRC. This form notifies tax authorities of your move and will ensure you are taxed properly after you leave. If you continue making an income in the UK or are receiving interest from savings you will need to fill out a R105 form and send it to the financial institutions where your savings exist.
As a non-resident you are required to pay tax on income derived in the UK as well as income or interest on disposed assets. To avoid paying tax in two countries, research if the UK has a double tax agreement with your destination country. These agreements show which country has the jurisdiction to implement taxes on your income and/or profits. For those selling property in the UK as a non-resident, capital gains taxes will apply.
Contacting a tax professional and financial advisor is recommended when planning a move abroad, to understand the specific laws that will affect you.
Start thinking about how you’ll manage your finances before you move
2. Exchange rates and transfers
When moving to a new country it is important to be aware of the exchange rate environment and how this will impact the transfer of money from one place to the next. There are many factors that affect the exchange rates on a national and global scale. Speaking to a currency specialist will help you decipher if it’s best to lock in a current rate, or wait for more favourable rates within your timeline. We work with Smart Currency Exchange who provide their clients expert market guidance and help thousands of Britons lock in favourable exchange rates for future transfers.
Whether making mortgage payments, transferring pension funds or sending income from your new country back to the UK, consider the best way to do this before you move. Smart Currency Exchange can arrange one-off or regular payments that are convenient and will help you avoid excess fees and charges. Having these set up before you go will take the hassle out of managing your finances.
3. Set up a bank account as soon as you arrive
You are going to need a bank account as soon as you arrive, if not before. International bank accounts can be used as an interim to keep money in while getting settled in your new place. If you bypass the international bank account you will want to set up an account in your new country right away.
Depending on your circumstances you may want to close your UK bank account after you arrive in your new home. This would only make sense if you will no longer be using it and if you wish to take full advantage of residency and foreign tax jurisdiction, by showing your lack of home country ties.
Whether making mortgage payments, transferring pension funds or sending income from your new country back to the UK, consider of the best way to do this before you move.
4. Arrange your pension (if applicable)
Many people moving abroad are retirees who plan to live on their pension income. You will need to do your research to determine if your pension will grow, or will be frozen in your new destination. Offshore pension transfers can sometimes be a way around frozen pensions. For those looking to transfer their pensions via regular payments to their new country can do so with a payment specialist such as Smart Currency Exchange.