Save yourself time and money by following our expert guide to keeping costs and budgets in check – by Danny Cox of Hargreaves Lansdown
1. Plan ahead
You may have already started to think about where you will live, whether to rent or buy, and how much income you will need. More detailed planning will raise issues and complications you may not have thought of, giving you time to deal with them before costs escalate or mistakes are made. For example, the rules surrounding tax residency are complicated and the timing of when you change residency from one country to another might provide some distinct tax advantages.
2. Allow for contingencies
Your contingency plan should include a cash fund for emergencies in your destination country. If you plan to keep a foothold in the UK, you should also keep a UK cash fund. Protecting your financial position from illness or death is another important consideration – review your existing insurance policies and top up where necessary.
If your health deteriorates what facilities are available in your new home country? You may be able to claim reciprocal care under the NHS and it is important to understand any entitlements.
3. Use a currency broker when moving money
A currency broker is likely to be much cheaper than a high street bank.
4. Make the most of your pensions
For the majority, the last opportunity to pay into a pension and obtain tax relief will be just prior to leaving. As with your investments, consider simplifying your pension affairs before you leave. It may be beneficial to transfer pensions from the UK to a recognised pension scheme in your new country (perhaps a new employer's scheme) or into a QROPS (Qualifying Recognised Overseas Pension Schemes). As with any transfer you should weigh up the benefits of transfer against the costs.
5. Maximize income in retirement
Emigrating is often timed with retirement. Taking the benefits from your pension plans is usually easier when you are still based in the UK since certain documents have to be sent by post. Shopping around for your pension annuity could improve your income by as much as 30 per cent. This is best done through a UK annuity specialist. Alternatively, if you select income drawdown, you will need to manage this pension remotely and a low cost SIPP is easy to manage.
6. Don't forget your state pensions
Your National Insurance Contributions will stop. However, you will be entitled to some state pension at retirement age. Check your entitlement and how to claim at www.direct.gov.uk.
7. Make the most of your investments
Managing your ISAs and other investments from overseas is easier if you use an investment supermarket (a service which manages gilts, ISAs, stocks, shares and trusts in one place). These allow you to consolidate and simplify your affairs, and then manage them on-line without relying on the postal system or expensive telephone calls. Before you move, maximise tax-efficient investments such as ISAs. You cannot make contributions once you have emigrated. Investigate tax-efficient investments in your destination country.
8. Reduce tax
Careful planning should reduce your tax bill. Generally speaking, you will be taxed by the country of your residence for tax purposes. If you hold assets in more than one country, each will try and tax the income and profit from those assets during your lifetime and try and tax assets on death through estate taxes. That said, double taxation agreements normally mean that you can offset taxes paid in one country against another.
9. Tidy up legal lose ends
For example, a professionally drawn will ensures your affairs are dealt with according to your wishes when you die. You should consider a UK will for UK assets and another will relating to your destination country.
10. If in doubt, take advice
If you have any doubts you should take professional advice, particularly on legal and tax issues. Use a firm which specializes in advice for ex-pats