Offshore Banking, Savings and Investment News
News and information for expatriate and international investors and savers.
Rules relating to the payment of CGT by non-resident UK property owners will change in April and expats will be affected.
Significantly sneaky draft legislation was published last week that will affect the way capital gains tax (CGT) is charged on the sale of UK property assets owed by expats. It is due to come into effect from April 6th 2015, and it is expected that the vast majority of expat property owners could be affected. The worst-case scenario is that expat property owners will lose up to 28% of their property profits.
From April 2015 capital gains tax will be payable by all expats and non-UK residents on any gains made from sales of British residential property. Obviously buy-to-let property and holiday homes, which are rented out, will fall within this new CGT regime. It will also affect British expats who hold an empty British property that they were hoping to sell at some point to perhaps fund an overseas home purchase.
If you sell before April the 6th 2015 the old rules still apply. What’s worth mentioning is the fact that Principal Private Residence (PPR) relief could still be available or partially available for some. Under Principal Private Residence relief UK residents living in the property in question who then sold it would be exempt from paying any CGT, as it is not payable on one’s main home. (Unless you’re Boris Johnson and have duel UK/US citizenship…) So affected expats could choose to return to the UK, reside in the home and then sell it. However, it’s not quite that simple.
The expat personal tax allowance in the UK has been protected and extended, and other Autumn Statement tax changes could see expat Brits even better off.
Earlier this year we reported that the Chancellor was considering scrapping the personal tax allowance for expats and that this potentially signalled the start of a tax attack on non-resident Britons. The good news is that following the consultation period the Chancellor has announced that things will stay as they are for Brits abroad…for now.
The Autumn Statement last week actually extended the personal tax allowance to £10,600 – this will come into effect from April 6th 2015. Many who commented on the consultation and the proposals advised that far from bringing Britain’s tax regime in line with those of other nations such as the US, Canada and some countries in Europe, scrapping the personal allowance for anyone who didn’t have “strong economic ties with Britain” would actually make the entire tax system in the UK unworkable.
It seems that the government has accepted this argument for the time being, and also agreed that the current system is internationally-competitive for non-residents. There was further good news for some expats in the Autumn Statement too…
If you’re hankering after a new life abroad home schooling your child could be key to your freedom.
I recently bumped into an old friend whose daughter is the same age as mine. We had a quick catch up which included a conversation about preschool options locally. She informed me that she and her husband, who’s an expat from the Netherlands, have decided to home school their daughter because they both want the option of living part-time in the UK and part-time in the Netherlands.
This led me to have a think about my many expat friends around the world and how many of them home school their children. The majority do. The ones who have the most internationalised lives and who have relationships with expats from different nations for example, they all home school. And their children all seem to benefit significantly from this approach to their education for multiple reasons.
A round-robin email later and I can bring you the findings of my albeit limited survey, which shows that the main reasons for choosing home schooling include distrusting the local education options, and discovering how easy an approach it is nowadays thanks to the internet! There are some cons to be aware of however, and in the interests of balanced reporting I’m going to mention these too!
The qualification rules for the British state pension are changing in 2016: will you still qualify?
In April 2016 the rules relating to who can qualify for the British state pension are changing quite significantly, and among those likely to be affected by the new rules are expats. Currently you have to have made 30 years National Insurance contributions (NICs) to qualify for the full state pension, and have been contributing for at least a year to have any entitlement at all.
From April 6th 2016 the rules change as follows: anyone retiring on or after that date will have to have made 35 years of National Insurance contributions to be entitled for the full state pension. What’s more, anyone wishing to claim any of the entitlement at all will need to have been paying in for at least 10 years.
Whilst this will come as music to the ears of some who are well aware of unfairness in the British social payment system currently, it may concern those expats who have missed some years of National Insurance contributions. However, there is a way to play catch up with your NICs to ensure you will still qualify for the full state pension.
2 new reports highlight the very real risk that all expatriates face when it comes to the security of their money
Two reports have been published in the last week that really draw attention to the fact that if you’re an expat you’re outside any pre-prescribed financial box; and that as a result, your financial position may be being compromised.
The first report looks at how expats themselves often lose track of what accounts they have open and where, what these cost and the value of each one to the expat in question. Additionally it touches upon the fact that too many expats falsely believe they can only manage their financial affairs as they did before becoming internationalised.
The second report touches upon how almost anyone and everyone in the business of looking after an expat’s money is seemingly coming at the issue from entirely the wrong angle. It explains that thinking in the financial industry has to change entirely – and importantly this needs to happen sooner rather than later to stop expats being in such a vulnerable financial position.
Where in the world do citizens get the very best pension provision?
If you’re thinking about retiring abroad it’s critical that you learn all about the nations in the world where they give their retirees the best pension. After all, you may be able to benefit! If you’re still in employment perhaps you could relocate to the best nation and take up residence and qualify for their pension scheme?
Alternatively, if you want to retire abroad it will be important to know where in the world pension provision is very poor, so that if you really want to live there anyway you can ensure you have enough in your own private pension pot to afford yourself a decent standard of living throughout your retirement.
Thanks to a comprehensive survey undertaken by Mercer we can reveal the top 10 nations in the world for pension provision, and explain to you why they rank as they do, and any pitfalls you may need to watch out for if you’re hoping to relocate and benefit from a given country’s pension scheme. What’s more, it’s worth noting that some countries in the top 10 are in the British frozen pension list…
UK pension rules are changing, but they don’t necessarily mean any expat should leave their pension in Britain.
You’ve got to feel at least a tiny bit sorry for the pension industry in the UK. It’s survived unchallenged for many a long year. It’s been free to hoodwink retirees into buying poor performing annuities, and many working in the industry have become super wealthy out of the restrictive landscape that all savers have been subjected to. And then along come so many changes to the entire industry that providers and advisers can’t keep up with what’s expected of them!
According to a recent article in The Telegraph: “The pensions industry is reeling from an unprecedented onslaught of legislative and regulatory change. Some providers are even already publicly waving the white flag and calling for some breathing space; it seems the Treasury is not listening.” But what do all of these rule changes mean for expats?
Until very recently expats were often well advised to look to QROPS (qualifying recognised overseas pension schemes) if they wanted to make the most of their pension. But with many of the perceived benefits of QROPS soon to be available from an onshore pension (from April 2015) are QROPS even worth considering, or will you be able to take your pension out of the UK in a hopefully huge cash lump sum when you choose to retire, and spend it how you choose? What are myths, what are truths, and what do you need to do about your pension right now?
Are you an expat? Do you need a mortgage? Shelter Offshore may be able to help.
Don’t believe anything you read (except this article of course!) about expat mortgages! They are almost impossible to find. How do we know this? From bitter first-hand experience, and the tales of our readers. However, after almost a year of searching high and low for a solution – we think we’ve found one and now we want Shelter Offshore readers to help us test out a new expat mortgage resource please!
The Background: about a year ago we began receiving a slow but steady stream of enquiries from expats seeking mortgages. At the same time we were well aware that the media had begun reporting tentative green shoots emerging from banks and building societies’ expat mortgage pots.
It seemed from enquiries received that the reality of approaching any of these lenders was not what journalists were reporting – and that it was still impossible for expats to get any form of finance to buy a home in the UK - or even abroad. Whether the expat in question wanted a mortgage for a home, a buy to let or to self-build, or finance was required from equity release or a restructuring of property assets, banks were universally closed to any expat enquiries. So, we set about finding a solution…
If affordable access to healthcare is important for you, know before you go what to expect in your new nation!
Living in a country with a health system funded by taxes and taken for granted by many as a free resource, we Britons often have a steep learning curve when we move abroad. We may have to buy health insurance, and even get to grips with how a private healthcare system works.
If you’re thinking of relocating overseas, then researching the healthcare system and how it’s funded in your new nation will be a key point to cover in your pre-move research. HSBC has just produced a good resource for would-be expats to refer to; it covers affordability and standards of healthcare in many favourite expat hotspots worldwide.
Interestingly Britain is almost slap bang in the middle of the chart in terms of affordability and standards, and there are plenty of countries in the world where standards are far higher and where care is far cheaper. If you want to know more about your chosen nation’s health system, HSBC’s infographic will be a good place to start.
How to choose the best place to retire with checklists and advice
I love it when mainstream media gets in on the debate about where to retire abroad. All they ever do is focus on the hours of sunshine and the property prices! Such was seemingly the sum total of Max Davidson’s article in last weekend’s Telegraph. The newspaper’s Property section decided to give itself over to focussing on retirement – as if finding a cheap property is the be all and end all of finding the best place to live when you finally reach retirement!
So anyway, Max Davidson’s piece was acutely focussed on where to live in a cheap house and perpetual sunshine (not quite sure how Blaenau in Gwent made it into his top 20 mind you!) But whilst I appreciate that such articles are only written for entertainment and advertisement, (as opposed to edification and information), my article will show why you really have to focus on far more than the price of property when looking for the best place to retire: whether at home or abroad.
Ultimately, the price of property should be close to the bottom of your list of concerns, because you should be renting not buying anyway (see below for my reasoning) – but as you will likely have a fixed income in retirement, where you choose to live has to tick every single conceivable fiscal box if you’re to enjoy a stress free retirement.