Preparing Your Finances for an International Relocation

Published January 22, 2024
Preparing Your Finances for an International Relocation
Preparing Your Finances for an International Relocation

Moving overseas is an exciting prospect for many, with around 300,000 people opting to relocate to another country from the UK every year. There are those that are looking for a peaceful retirement in a warmer climate, others may be setting up a business or pursuing career opportunities, and some might be families wanting a better quality of life.

Regardless of the reason for your move, organising and understanding your finances is key. You need to create a realistic budget and ensure you have full oversight of your taxes, assets, incomes, and pension savings – and how your relocation may impact these.

The international expat financial planning specialists at Chase Buchanan Wealth Management will present some of their top tips to plan for a smooth international relocation, highlighting important factors to build into your plans.

1. Researching the Tax Implications of Your Move

Step one should be to consider all the tax matters that may influence your finances, expendable income and overall tax obligations. Many expats assume that a relocation will effectively mean they are no longer UK residents and are not liable for any taxes – but this is a common mistake.

For example, if you decide to retain a property in the UK as a rental asset, you will be expected to declare your earnings and may be exposed to income tax on the profits made.

In some scenarios, an expat living abroad may still be categorised as a UK tax resident, depending on the time you spend in each destination. In this case, you may need to pay UK tax on your international income, which can include:

  • Employment or business earnings.
  • Investment income earned overseas.
  • Rental income from an overseas property.
  • Pension income earned in another jurisdiction.

In terms of the overall tax burden, much depends on where you intend to move. Your chosen country of residence may offer favourable tax treatments, flat-rate tax brackets for foreign nationals, or have taxes that do not exist in the UK, such as a wealth tax.

Our advice is to consult an experienced financial adviser to assess whether your tax residency status will change, what tax returns and declarations you need to make to each respective tax authority, and how this all fits together.

2. Creating a Relocation and Ongoing Budget

Whilst the costs of relocating are normally quite easy to budget for, you should also assess your long-term living costs. A relocation might include flights, shipping belongings, visa application fees, and buying or renting a property, but the variations in living costs may be more considerable in the long term.

For example, have you looked into:

  • Availability and costs of school places for your children.
  • Employment opportunities and average salaries.
  • Typical property prices, running costs and utility bills.
  • Transport networks, the costs of running a vehicle or using public transport.
  • Average consumer costs for groceries and everyday supplies.

Joining expatriate networks and communities, visiting the place you intend to move to and spending time meeting people and exploring the local area are all beneficial. This ensures that you aren’t likely to encounter any unexpected costs following your relocation.

3. Getting Your Banking in Order

Most expats will need a local bank account in their chosen country of residence – you will normally require a domestic account to set up direct debits and receive a salary. In some countries, you can set up an account online from any location to get your new bank accounts ready before you move.

Others will only permit you to open an account in person with proof of ID. In almost every case, you will be expected to visit your local branch to provide documentation before the account is active.

The banks and branches available are worth researching since services can vary significantly. For instance, you may need a bank that has cash machines in your immediate area since the prevalence of contactless and cashless payments differs between countries.

You may also need to retain a UK bank account if you have income or outgoings that remain in Britain. Some expats also have their State Pension paid to a local bank account to avoid the currency exchange risk and use these funds to pay for UK-based expenses, such as fees related to managing a rental property back home.

4. Informing HMRC of Your Plans

Advising HMRC of your plan to move is important since this reduces the potential for any tax queries or complications later on. The easiest route is to complete the P85 form, which tells the tax authority that you are moving abroad.

HMRC can refer back to this notification to analyse which taxes you may be liable for and whether you are required to submit tax returns.

5. Reviewing Your Pension Products and Retirement Savings

If you plan to retire overseas, you will need to evaluate how this impacts your pension. Depending on where you will live, you will normally still be entitled to the UK State Pension, but this may be capped at the value payable at the time of your move – you may not, therefore, receive an annual increase.

Expats with private pension funds also need to consider the best way forward, with options to transfer pensions to overseas plans, restructure retirement savings into another investment product, or retain a UK-based pension fund and receive payments to an overseas account.

The key factor is to assess which options will be in your interests and provide the income and lump-sum drawdowns you may be reliant on. However, pension planning is equally important for expats some way from retirement since moving abroad may influence your ability to continue making contributions.

6. Transferring Money Overseas

You will likely need to make money transfers to your bank account in your new place of residence, and it is often advantageous to work with a currency transfer provider. The exchange rates and costs charged by banks may mean the value of the transfer is significantly lower than expected.

While there are normally no immediate taxes to pay on transfers, the rules may depend on the place you are transferring funds to, with some countries having extra regulations to safeguard against money laundering.

Expert Assistance Preparing Your Finances for an International Relocation

We have touched on just a few of the considerations every expat should think about before forging ahead with an international move, and we recommend you seek specialist advice before finalising your plans.

From understanding your tax residency position to evaluating pension restructuring options, assessing your long-term tax exposure and creating a budget, getting your finances in order will go a long way to ensuring your move is successful and stress-free.

The Chase Buchanan Wealth Management teams around the world have years of expertise and provide tailored, professional assistance at every stage. Please get in touch with our nearest offices at any time for more information or to arrange a good time to talk.

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About Chase Buchanan Private Wealth Management

Chase Buchanan is a highly regulated wealth management company who specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, UK and the USA.

Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15.


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