Financial Planning covers many different areas, most of which provide the opportunity to mitigate any unnecessary taxation for our clients. Many expatriates who decide to ‘live the dream’ and retire to a warm tropical country, tend to then forget about their UK tax status. With legislation on such matters changing so frequently, they would be well advised to keep abreast of such changes just in case they ever decide to return to live in the UK. Leaving the country correctly is, therefore, essential in ensuring that you do then not fall foul of the ever expanding HMRC tax net.
The process can be relatively straightforward and could well include some or all of the following:
- Completing the correct ‘Leaving the UK’ tax declaration
- Obtaining any possible tax rebates in the year of leaving
- Registering as a non-resident landlord, to receive gross rental income on any UK properties
- Opening an offshore bank account
- Transferring any relevant UK pensions into an offshore QROPS arrangement
With the recent overhaul of the UK’s rules on domicile and residence, we would also need to look at your ‘social ties’ to ensure that you are not still treated as UK resident on your worldwide income and assets…DESPITE moving to an overseas location. This could involve detailed analysis and advice on:
- Ensuring any future earned or pension income is NOT subject to UK income taxation
- Arranging your estate to ensure your assets are passed on without any UK Inheritance Tax, to the beneficiaries of your choice
- Tax efficient income provision for beneficiaries, without the need for probate
- Advice on making a will in your country of domicile and creation of trusts where appropriate
- Maximising the returns generated on any other investments / cash deposits, through the careful use of offshore investment structures
For expats and international workers who are living outside of the UK, getting professional advice on inheritance tax planning from a qualified financial adviser is even more vital – these already intricate inheritance rules can be further complicated due to the fact that the tax laws of more than one jurisdiction may need to be considered.
Even a British citizen who has spent most of their adult years outside the UK, could still be liable to pay UK inheritance tax. Probably the most famous case of this sort involved the actor Richard Burton. Although he lived in the US for 27 years, because his body was buried in Wales, the Inland Revenue deemed him still residing in the UK and took £2.4m in inheritance tax (IHT).
Everyone gets organized at some point, they just might not be around for it
“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue” Lord Clyde – Ayrshire Pullman Motor Services v Inland Revenue (1929)