Moving back to the UK? Manage the financial upheaval with this handy repatriation checklist
Written by Lynda Calver on February 09, 2017.
Expat life invariably involves a fair amount of moving as individuals and families come and go with great regularity. Perhaps it is your turn to say goodbye to your expat life and return back home to the UK? Whether you’re moving for work, to retire or simply because you want to, your repatriation will inevitably involve a huge amount of upheaval and a whirlwind of activity.
As well as the logistical and emotional aspects of moving, there are many financial concerns which you need to consider. Here’s a handy checklist of the most important financial considerations you need to think about if you’re returning home:
1. Establish your residency status
It would be nice if this was simple and clear cut but often it isn’t. There is a wealth of information on the UK governments own site but if in any doubt it is wise to consult a specialist tax lawyer who can clarify your situation for you.
2. Familiarise yourself with new state pension legislation
The state pension age is rising. From April 2017 you will need 35 qualifying years of National Insurance contributions to be eligible for a state pension, compared to the 30 years required under current legislation. If you have been working in Asia, those years won’t count although it is possible to top up by paying voluntary contributions. Certain countries have bilateral social security agreements with the UK and you can find a list here.
3. Make yourself aware of your personal tax allowances
This amount changes annually. Currently you are allowed to earn £11,000 before you become eligible to pay income tax and this will rise to £11,500 from April 2017. The threshold for the 40% tax bracket has also risen in the last year to £43,000 and will increase again in April to £45,000. Higher earners will be pleased to hear that the government has pledged to raise this threshold to £50,000 by 2020.
4. Review your retirement plans in the light of recent changes to the Lifetime Allowance
The standard pensions Lifetime Allowance (LTA) is the limit on the amount you can draw from a pension without triggering extra tax charges (above your marginal UK income tax rate). The LTA was introduced in 2006 and rose every year until 2010 when it peaked at £1.8mn. Since then it has been reduced twice, most recently in April this year from £1.25mn to £1mn.
If you have a pension portfolio approaching or exceeding that kind of value then you need to take action to avoid the risk of being taxed at a rate of 55% on any lump sum you take above that or 25% on any excess which you take as income.
5. Check your life insurance policies
Moving country often invalidates existing life insurance policies. This is such an important aspect of your financial plan that you need to ensure continuity of protection when you move. Have a look at your policies and make sure your family are sufficiently covered when you are repatriated.
6. Work out if you are liable to pay CGT if selling a property
Capital gains tax (CGT) is payable by all non-UK residents when selling UK residential property regardless of its selling price. The amount of CGT payable is calculated by taking the sale value 0f the property and subtracting its value when the legislation came into effect on 6th April 2015. That’s why it could be in your interest to get a written valuation as soon as possible. Residency can impact on whether or not you are liable to pay CGT depending on tax rules in your current country of residence so this could be an area to talk through with an expert so you can work out the most tax-efficient way to dispose of your assets.
7. Review your estate planning
Inheritance tax is a bugbear of many and most of us are interested in ways of minimising the amount payable. Getting good advice on this is a must to protect your wealth and ensure it goes to the beneficiaries of your choosing in the event of your death. Our will desk would be happy to help.
Organisation is key to all aspects of moving home. I can’t help much with the practical side of packing up your home and shipping it elsewhere but if you need assistance with the financial side of things, I may well be able to ease the stress! Do contact me if you are concerned about any of the points mentioned above.
Disclaimer: Infinity is not licensed or qualified to give tax advice.
This article is intended for information only and does not constitute tax advice. If you are in any doubt about your tax status please contact a qualified professional.