Are you an Expatriate returning to the UK?
The rise of globalization and rewarding career opportunities has enticed British expats to relocate all over the world. This has marked a shift in economic powers and the number of expatriates leaving the UK continues to rise. Despite this, as records from the Office of National Statistics show, over 78,000 British nationals chose to return and settle in the UK last year. So, what should you know if you are an expatriate returning to the UK?
On the face of it, returning and integrating into ‘Western organization’ should form a simple task. In comparison with the regions and locations, most expats have successfully tackled throughout their careers. However, with the coalition increasingly searching for new revenue streams, the savvy organization of the UK tax system means there are numerous financial implications for an Expatriate returning to the UK to consider.
Harrison Brook helped many of the 78,000 British nationals who did the same last year.
At Harrison Brook, we help our clients make the most of their increased pay or tax-free salaries. Therefore, securing their and their family’s future through a range of tax-efficient investments options. However, having put such effective plans in place, it is important for an Expatriate returning to the UK to ensure that they organize their finances in such a way as to maximize these tax-efficiencies.
For many clients, the most valuable service we offer at Harrison Brook is our deep understanding of the UK system. Clients also appreciate the ability to continue working with them when they eventually return home. Furthermore, our familiar and knowledge of the leading expatriate investment products including EIB, ERB, AMP, Vision and Premier plans allow us to help clients’ position their existing assets accordingly.
A common need for an Expatriate returning to the UK is the repatriation of foreign salary in their overseas accounts. Repatriating funds is not a simple matter though. Many countries place restrictions on the method and amount of the transfer.
Additionally, repatriating funds to your UK account can trigger thresholds that have been put in place to protect the UK banking system from the growing dangers of money laundering and terrorist funding. Whilst expatriates should have no problem in evidencing the legitimacy of their wealth, it is an inconvenience that can easily be avoided by seeking the appropriate advice.
UK Tax Issues
HMRC is a sophisticated body and the electronic age makes it easier for them to locate and demand their slice of tax they deem to be owed. As an Expatriate returning to the UK you may still be liable for paying tax upon any wealth that you have accrued from earnings or gains made overseas, even if within a tax-free state such as Dubai.
This is dependent upon your tax residency and the rules surrounding the topic can become complex, so seeking trusted tax advice from Harrison Brook is an essential step for any Expatriate returning to the UK.
Transferring Currencies – Foreign Exchange
Once we have formulated a tax-effective strategy for repatriating your funds, the final step is securing the best transfer value.
The timing of your currency transfer will have a huge impact on the amount you receive in British pounds. Due to recent political and economic events, it is imperative to place your trade with a professional. Especially, one who will be able to postpone or accelerate your transfer depending upon the impending economic climate affecting the two currencies in question.
Harrison Brook is proud to take the stress out of Foreign Exchange for Expats. Helping our clients to achieve the most competitive rates in the market and avoiding the extortionate charges of high street banks which can be as much as £3,500 for every £100,000 purchased.
Get the best possible transfer value for your funds today: No Transfer Fees on International Money Transfers
Transferring A QROPS back to the UK
QROPS have been an essential financial planning tool for Expats residing outside of the UK. But what happens to an Expatriate returning to the UK with a QROPS? What are the options for transferring a QROPS back to the UK?
Keep the QROPS
QROPS are subject to the rules of the tax authority in the country in which the assets are situated. As such, no taxation of funds held within a life assurance bond in, for example, the Isle of Man. However, if you begin to draw down from this offshore-based QROPS within the UK, the tax would be due and the following payments would also be subject to UK tax:
- Unauthorised payments.
- Winding up lump sum payments.
- Small lump sum payments.
- Serious ill health lump sums paid to a member age 75 or older.
- Certain lump sums paid following the death of a member.
Move the QROPS into a UK ‘Self Invested Personal Pension’ (SIPP)
A SIPP is the UK equivalent of a QROPS. It is designed for UK residents to consolidate and manage their existing pensions from a UK base rather than international offshore jurisdiction. As with QROPS, it allows the holder more freedom. Therefore, to control over their pension pot to manage and make investment decisions.
Moving from a QROPS to a SIPP would allow you to repatriate your existing UK pensions into the UK system. This protects you from future changes in QROPS legislation and jurisdictions. In addition to making it much easier to administrate when withdrawing income in the future in the UK. Often there is no new setup fee when transferring a QROPS into a SIPP as the setup fee would have been paid on the opening of the QROPS. Additionally, the annual running costs are typically dramatically cheaper on a SIPP than on their QROPS counterpart.
The information contained herein is for informational purposes only which is subject to change and should not be relied upon. You should seek advice from a professional adviser before embarking on any financial planning activity.