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Any questions: Finance

Any questions: Finance

I am in the process of moving to Australia and want to know what to do with my stocks and shares ISAs. Do I have to cash them in or do I have the option to transfer them?

You will not be able to transfer your ISAs to an Australian account. However, tax efficient wrappers such as ISAs can be retained [in the UK] when you move abroad.

ISAs shelter your cash or investments from any further tax so clearly have tax advantages over other types of investment. You can continue to pay into an ISA while you are still a UK resident for tax purposes but cannot normally contribute once you have emigrated. You will need to notify all the financial institutions you hold ISA investments and/or savings with that you are moving abroad and provide them with your new address. Importantly, you also need to consider how you might deal with them in the future from such a distance.

ISA providers that offer online access to your account have significant advantages over those that do not, as do those that will issue reports and contract notes via email rather than by post. Generally the ISA fund supermarkets provide these services alongside online trading and account administration.

You should also find out if your ISA provider has a phone line for clients abroad that doesn't cost a fortune to call and when you sell your investments, whether you receive a cheque or the proceeds can be paid directly into a bank account.

Maintaining a UK bank account usually helps with dealing with the proceeds of investment sales. If you have accumulated ISA investments with a number of different managers over the years, it is likely that your dealings when you go abroad will be more complicated than they need to be. Consolidating your investments into one ISA service will make things easier and help you make more of your money. You should do this before you go - few providers will accept new accounts from non-UK residents.

Once in Australia you should consider the tax efficient savings products available to you there to complement your ISAs.

I have been advised to transfer my UK pension schemes to a QROPS (Qualifying Recognised Overseas Pension Scheme). Is this a good idea? I am 53 and live in France.

QROPS were designed to allow pensions freedom of movement for individuals retiring abroad. QROPS is still a developing market and there are some pitfalls.

QROPS can have potential advantages over a UK pension, such as investment flexibility and ability to eliminate currency risk. QROPS had previously offered more flexibility in taking pension benefits although this distinction has largely disappeared since the UK's removal of compulsory annuity purchase.

Tax advantages on taking pension benefits are unlikely to be significant as pensions are generally taxed on the basis of an individual's residency. It is important to say that a UK pension is designed to provide an income in retirement and the generous tax breaks available are only offered with that principle in mind.

For a QROPS to obtain qualifying status, it has to adhere to this principle, which normally means that benefits are paid in the same way as UK pensions, i.e. 25 per cent tax-free cash and the balance as a taxable income. QROPS that claim to be able to pay the whole fund as tax-free cash, and/or invest in residential property are not adhering to the spirit of the legislation and are likely to be subject to close HMRC scrutiny.

There have already been cases of some QROPS being closed down. Your advisers should be making it clear to you the benefits of transferring to QROPS based on your situation - and that these benefits should outweigh the costs of the advice and the QROPS product charges.


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