12 Things to Consider If You Are Returning to the UK After Living Abroad
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Many people leave the UK to live abroad. This may be because of a work posting or a long held goal of retiring to a sunnier climate. Some of those people will eventually move back to the UK because of ill-health, a personal financial crisis , a family emergency or a work posting has come to an end.
In this article, we look at 12 financial planning points you may want to consider if you are living abroad and are thinking of moving back to the UK.
Before we begin our list, it is worth noting that you should start planning at least 12 to 18 months before returning to the UK in order to take into account any unforeseen circumstances. For example, selling property and assets and restructuring your finances can take longer than you expected. Furthermore, it is always important to obtain advice from reputable sources especially around local tax rules and legal issues. It is also prudent to have funds available to tide you over once you arrive in the UK.
#1 – Tax
This is a key area where it makes sense to obtain professional advice as the rules can be relatively complex.
Once you are UK resident you pay taxes on both your UK income and gains and any foreign income and gains (unless your permanent home remains outside of the UK).
If you are returning to the UK within five years you may have to pay tax on any income or gains whilst you were non-resident although earnings or employment income won’t be taxed. These rules are known as the ‘temporary non-residence’ rules.
When you return to the UK, you may need to register for self-assessment.
Don’t forget that the UK tax year runs from 6th April to 5th April each year which may be different to the tax year in many jurisdictions.
#2 – Selling Investments Abroad
You will need to be aware of the tax consequences of selling assets both in the local jurisdiction and the UK. Obtaining advice in this area is vital to understand whether it is best to sell assets before you move back to the UK or to retain them.
Another consideration is that some offshore investments may have high potential early surrender charges or back-end loads.
#3 – Selling a Property Abroad
Selling your main residence in the UK doesn’t generally give rise to a Capital Gains Tax (CGT) charge whereas selling your home abroad could and, again, it is worth obtaining advice on this. For example, you might not want to sell the property in the same tax year as you move back to the UK. This might mean renting for a period of time before returning to the UK.
#4 – Buying a Property in the UK
If you have lived away from the UK for a significant amount of time and have no financial assets in the UK you may find obtaining a mortgage difficult as you may not have a credit rating. As such, you may need to re-locate to the UK first and rent temporarily. It makes sense to speak to a mortgage professional to discuss your requirements.
#5 – Pensions
If you have a foreign pension, it might be worth considering transferring this to a UK pension. Most foreign pensions are defined as Qualifying Recognised Overseas Pension Schemes (QROPS) although not all. It is important to obtain advice in this area especially on any tax implications around the Lifetime Allowance.
#6 – State Pensions
The State Pension in the UK is based on National Insurance Contributions (NICs). If you have paid contributions or the equivalent in more than one country, you might be eligible for separate state pensions.
You may want to check your NIC record for any gaps and consider paying Voluntary NICs to make up any short-fall where you are able.
#7 – Cash and Currency Considerations
You will need to open a UK bank account although it may also make sense to retain a foreign bank account and some cash in the relevant currency just to cover any final bills or last-minute invoices.
Transferring large amounts of cash to the UK will mean that you will be subject to the prevailing currency exchange rate which can fluctuate. You will also be subject to any transfer charges. As such, it makes sense to shop around and consider a specialist (and regulated) money transfer firm as, often, banks are more expensive and have worse exchange rates.
#8 – Insurance
If you have taken out insurance policies abroad, you should check whether these are valid in the UK. If not, you should consider reviewing your need for Protection policies and taking out the appropriate cover.
#9 – Health
You should arrange to move your health records to the UK so that they can be entered into the NHS system.
#10 – Long Term Care
To qualify for social care, you have to show that you are ‘ordinarily resident’ in a particular area of the UK. The local authority only has a duty to assess you for social care once you are there in person. Unless you can show you have the required connection to an area and you meet the local eligibility criteria, the council may conclude that it has no duty to provide long-term care for you.
Planning and organising care in the UK from abroad can be complicated and you should consider having a back-up arrangement if this is your intention. This could involve returning to the UK and living in a private care home temporarily to establish your ordinary residence.
#11 – Schools
For those with children, it is important to register your children with the school you would like them to attend. Some schools can be hard to get into and therefore it is useful to put the children’s names down early.
#12 – Review Existing Wills
If you retain assets abroad, it makes sense to review your overseas will and draft a UK will. Different jurisdictions may have different ways of dealing with assets in the event of your death. Obtaining advice in this area is crucial to ensure that your loved ones are protected.
Summary
The number of things to consider before moving back to the UK can seem daunting which is why it is a good thing to start the planning process early where possible especially if your financial affairs are particularly complex or if you have lived abroad for a long time.
At Mangu Wealth Management, we aim to be your trusted adviser at the centre of your professional network. We can make referrals to tax and legal advisers who specialise in overseas jurisdictions to ensure that you are well prepared for making the return to the UK.
If you would like to discuss this further, please do get in touch by clicking the button below.