by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Expat Investor : October 2008
QUOTE, UNQUOTE Relocating abroad – the financial implications In a four-part series, The Fry Group looks at the financial implications for UK residents who are relocating from the UK, in addition to providing helpful advice for those individuals already working in Singapore, Hong Kong and Brussels. The UK perspective When looking to relocate abroad, it is vital to review all financial implications prior to departure. Every country is different, so advice should be sought to ensure you are fully aware of local financial matters, as well as understanding what impact your move has on any UK savings or pensions you wish to retain. Some people who have moved abroad for tax purposes sometimes find their status being challenged by the British taxman.What can expats do to avoid this situation? In our experience,HM Revenue and Customs tends to become most interested in people who have moved abroad but who retain significant connections to the UK. A recent example where they targeted a specific group of people was a couple of years ago when they opened hundreds of investigations into the ‘residence status’ of airline pilots and cabin crew staff who continued to work for UK airlines. Assuming that most people don’t fall into this category, I think that the best piece of general advice is to make sure you get some guidance about the strength of your claim, either from an independent adviser or from HMRC itself. Its helpline is useful and there is a huge amount of useful information on their website. What conditions do you have to meet to avoid being considered resident for UK tax purposes? Well, the first thing is that you have to really leave the UK. This sounds obvious; however there are circumstances in which HMRC can ask for proof that you have made a ‘clear and distinct’ break from the UK even before considering the question as to whether or not you have done sufficient to achieve non- resident status. This is particularly the case if you are leaving for personal reasons such as a lifestyle change or retirement. In these situations, it is important to be able to show how the pattern and circumstances of your life have changed and that your involvement and attachments to the UK have reduced substantially. If you move abroad but continue to visit the UK very frequently whilst having a home available for your use, or if your spouse and dependent children continue to live in the UK, it is unlikely that HMRC would accept that you have left at all, unless you are also working abroad and maintain a settled lifestyle there. Putting these considerations to one Planning a move away from the UK? Graham Barnes, International Director with The Fry Group, explains how expatriates can keep on top of their finances. side, what do the basic rules say? If you are leaving the UK to work, you must move abroad and live there whilst working in continuous full-time overseas employment (or self- employment) for a minimum period of one complete UK tax year. If you leave for any other reason, you must move abroad and live there on a settled basis for a minimum period of three years from the date of your departure. Under both situations you need to ensure that you subsequently spend less than 183 days in the UK during any complete tax year of non- resident status, and that you limit the total number of days spent in the UK to less than 91 per tax year on average. This average is taken over a four year period from the point of your departure and is tested at the end of every complete tax year of non- resident status. What pension advice would you offer to someone moving abroad? This is a very complex area indeed and professional advice should be sought. UK pension income remains taxable in the UK unless it can be specifically exempted by virtue of a double tax treaty. This includes the UK state retirement pension, although your entitlement may not be indexed linked when you live abroad. In 2006, the law also changed to make it possible to move unvested rights in UK personal and occupational pension schemes to foreign pension schemes which qualify for UK tax purposes. These are known as Qualifying Recognised Overseas Pension Schemes (QROPS). And if you take your pension income from a QROPS as a non- resident, you will be in receipt of non-UK income (not taxable) as opposed to UK taxable pension income which would absorb your UK tax allowances. What about ISAs and other tax-free saving products? Does leaving the UK mean leaving these tax perks behind? In the main, the answer is ‘yes’ – though in the case of ISAs you can keep any entitlements you had at the point of departure, but you cannot contribute to them after you have left the UK, or take out new ISA. www.thefrygroup.co.uk NEWS Overseas card and phone charges make Brits see red Fewer than one in five Brits say they get good customer care holiday in Spain, Greece, France, Croatia and Turkey, using research from its Holiday Costs Barometer._ Meals and drinks could add up to as much as £551 in Greece – costing families nearly £90 more than a year ago for the same items. The increase was almost as great in Spain, France and Croatia. The lowest increase (£44.15) was in Turkey,which is generally regarded as offering good value and which has seen a 28 per cent year on year rise in Post Office currency sales for Turkish lira. But there are ways to beat the Hidden charges for using credit and debit cards or mobile phones abroad top the list of holiday grumbles in a survey commissioned by the UK’s Post Office Travel Services. As the UK credit crunch continues to bite, the Post Office research revealed that six out of 10 top holiday irritations relate to perceived rip-offs. These include the cost of exchanging money abroad, the pressure to leave tips, even when service is poor, and the feeling that tourists get charged special high rates. The Post Office is the UK’s largest foreign currency provider and it’s research looked at average spends on currencies for European destinations. It found that holidaymakers would need to spend nearly £43 more to get the same amount of euros as they did in 2007 – £273 instead of £230. Similarly, they would need to pay £32 more to maintain the average 2007 currency purchase of £170 for Croatian kuna and £18 more to get the same number of Turkish lira (£217). The Post Office also calculated how much extra eating and drinking out in restaurants and cafes might cost a family of four on a one week holiday credit crunch, according to the Post Office. It says that families can claw back most, if not all, of the additional cash needed to pay for holiday essentials by avoiding spending on the very things that topped its holiday irritations survey. Helen Warburton, Post Office Head of Travel tells Expat Investor, “Our research showed that UK tourists are particularly irritated by the high charges for using mobile phones abroad and for using credit and debit cards to get cash abroad or make purchases. However, we estimate that a family of four could claw back nearly £76 by cutting out these costs in euro destinations - and this was based on moderate phone use. In Turkey, where mobile phone calls cost more, the same usage would cost more than £145. “Keep the phone for emergencies, turn the answer machine facility off to avoid expensive incoming calls and get holiday cash in advance, without paying commission or incurring high ATM charges. “If you do want to use a credit card, make sure that it is one that offers 0 per cent commission, like the Post Office Credit Card, as most cards charge a minimum of 2.75 per cent for every transaction.” Fast Facts 88110 To register for the digital edition, go to Paypal launches prepaid card PayPal, the secure online payment provider, has launched a prepaid top up card. The PayPal Top Up card is a reloadable VISA card and can be used almost anywhere the VISA symbol is displayed, in high street stores as well as websites. It gives people control over their spending, allowing them to pay as they go, says PayPal and it's also ideal for consumers who do not have credit or debit cards, and want some way to spend their cash online. PayPal says its Top-Up Card is one of the most competitive cards in the market, costing just £4.95 to get started. Using the PayPal Top Up card should be both convenient and practical with multiple ways to be topped up with money. It is the only prepaid card which can be topped up online in three clicks via PayPal and can also be reloaded offline at Post Offices and PayPoint retail outlets across the UK. PayPal says 2 EXPAT INVESTOR ? this card is particularly well suited for people who sell online, as it enables them to spend the balances stored on their PayPal account offline. Carl Scheible,Managing Director of PayPal UK comments, " Over one in ten of our customers told us that they're looking for ways to manage their spending… We know that less than a quarter of online shoppers feel secure about entering financial details when shopping online…. Security is at the heart of everything we do, and the card will be protected by Chip and PIN. If the card is lost, funds are secure, where a loss of cash is not. This is particularly appealing to people traveling or going on holiday as a pre-loaded card is more convenient than carrying cash or travellers cheques." Fast Facts 88111 October 2008 As budding businessmen and women face make or break in the latest series of Dragon’s Den, what separates the winners from the losers? New research from Alliance & Leicester Commercial Bank may have the answer. The Bank’s study, which profiled entrepreneurs across the UK, identified a number of traits which today’s tycoons have in common – could these be the secrets of entrepreneurial success? The research shows six in 10 business owners are the first born child, revealing their inner confidence and healthy self esteem. More than four in five (85%) have one or more siblings, putting to good use leadership and teamwork qualities learnt at a young age. Unlike the big egos and self- confidence often witnessed on- screen, the research reveals the character traits most successful entrepreneurs believe they have in common are actually being dependable (43%), considerate (22%) and a good listener (22%). Private education seems to have little influence compared to natural entrepreneurial flair, with nearly three-quarters (71%) coming from a state school background. However, further education does expatinvestor.com help. Nearly a fifth (17%) of business owners left education after GCSEs or O levels, while over a third (34%) were educated to degree level and almost one in five (18%) continued to secure a Masters or PhD. Meanwhile, a wealthy background appears to deter entrepreneurialism, with more than nine out of 10 successful business people describing themselves as either middle-class (50%) or working class (43%). The research reveals that a third (33%) started their business between the ages of 26 and 35 and London is the most likely place for a small business to start up, with two-fifths (40%) of entrepreneurs launching their future empire in the capital. With nearly three in 10 of small businesses failing before they reach three years, it seems business owners are learning to combat risk, with more than half (51%) saying that their approach to business is attention to detail and over a quarter (28%) saying it is being prudent with money. Nearly all entrepreneurs are united in sharing the same motivations for starting up. Nearly two-thirds (62%) wanted independence, over half (56%) wanted more control over their lives and almost six in 10 wanted to be their own boss so they didn’t have to answer to anybody else. Steve Jennings, Director of Business Banking, says, “The research shows that some types of people are more likely to take the leap into business than others but, whatever your personality, there are certain things that everyone can do to ensure the success of their business. “The secret of any successful businesses is remembering to temper bravery with prudence. Running a business does have associated risks but it’s vital to make sure that contingency plans are in place should the worst happen. “It is encouraging that many business owners say they pay attention to detail and take a sensible approach to their businesses’ finances. Setting funds aside in a high-interest deposit account and making sure that you have the best deal from all your suppliers will provide a financial cushion so that you can afford to grow and develop further.” Fast Facts 88112 New research sponsored by The Hartford finds that customer service is a critical issue for users of financial service companies: 38% have switched firms as a result of poor service. A mere 19% of British adults who have used financial services firms rated them as ‘good’ or ‘very good' at providing good customer care according to a new survey conducted by YouGov on behalf of Hartford Life, a subsidiary of The Hartford Financial Services Group. The survey, which measured attitudes about customer service from financial services firms other than banks, revealed that, while the British public didn't rate their financial providers highly on service, it is a key factor when people chose which firms to use. Over three- quarters (76%) of the survey respondents said that customer service was either the number one reason or a key reason why they chose a provider and, furthermore, nearly two in five respondents (38%) had stopped doing business with a financial services company as a result of receiving poor customer service. “The survey results clearly show that customer service has become a key differentiator in the financial services industry,” said Alistair Murray, Director of Customer Service. “The fact that two out of five people have ended relationships with financial services firms because of poor service is a real eye-opener for the industry and will no doubt prompt a number of providers to review their current customer service capabilities.” Secrets of entrepreneurial success revealed The survey results showed that attitudes towards customer care vary with age, but not necessarily in the way many people might suspect. Forget the stereotypes of ‘grumpy old men’ and carefree youth. Of those that have ever used a financial services company (excluding banks), the study revealed that Brits aged 25 to 34 are the most demanding age group from a customer service perspective, with 80 per cent saying that customer care was the most important, or one of the most important, reasons why they choose a particular firm. The group for whom customer service was the least important were those aged 55 and older, with 70% saying it was a key factor in making investment decisions. Fast Facts 88113 www.expatinvestor.com October 2008 ? EXPAT INVESTOR 19 3:36 PM Page 24 FIRST PERSON Back to basics on a UK domicile Rachael Holland, Head of Product Law and Financial Planning, Skandia International, explains the detail in domicile status. during life and on death in excess of a nil-rate band (currently £312,000 for the tax year beginning 6 April 2008). Exed200810p1new.qxd 11/1/04 11:47 AM Page 1 Investor £4.95/ €7.50/US$7.50 £4.95/€7.50/US$7.50 Serving expats for more than 19 years Serving expats for more than 16 yearswww.expatinvestor.com e than 17 years October 2008 email@example.com June 2005 “There are those that you know you should read, and then there’s the magazine you will read.” In this issue 6 Investment banking Bank managers keen to look after your investment portfolio. 14 18 19 21 Healthcare Successful policy selection depends upon you doing your homework. Expat investors What you’re investing in and your market views for the year ahead. Quote, Unquote – The Fry Group Moving around the world with your money. Property investment Is this the right time to buy into Florida? Regulars 10 Offshore funds 11 Investment news 12 Offshore savings 22 Offshore mortgage market 23 Property news British expats take on international identities Who you are and how you see yourself has been uppermost in the minds of the folks at NatWest International. Hannah Beecham reports on the Bank’s latest survey, which looks in detail at the way expatriates perceive themselves. One in five (20%) British expats say their sense of being British has diminished after moving abroad. Brits are adopting new ‘international identities’ and becoming more ‘localised’. Certain aspects of life back in Blighty are sorely missed, however, not least the pub and the unique British sense of humour. The NatWest International Personal Banking Quality of Life survey carried out with the Centre for Future Studies, reveals that British expats are consciously adopting international identities and actively integrating themselves into their adopted countries of residence, embracing different ways of life and immersing themselves in their new cultures. The study found that expats integrate more easily in English- speaking countries such as New Zealand and Canada. Hence, when it came to questions about quality of life, Canada and New Zealand were voted tops. As a consequence these countries also proved to be the easiest in which to settle. Dave Isley,Head of NatWest International Personal Banking, says, “British expats really are ‘at home’ abroad. They still want to hold onto what makes them essentially British and certain characteristics that are deemed British, such as the sense of humour and the traditional British pub, but over time they integrate this with the new cultures and traditions of the country they have moved to.” Almost all (99%) respondents said they had no regrets about emigrating, and felt their decision to move was a good one. Nevertheless, over three- Five top tips for moving abroad Hannah Beecham presents these top tips for making the move abroad as seamless as possible. Bringing advisers and investors together Investor Serving expats for more than 17 years £4.95/ €7.50/US$7.50 www.expatinvestor.com 1) Square your tax situation with the taxman Before leaving the UK, working Brits must obtain formP85 from HMRC. Contact your local tax office, or go to www.hmrc.gov.uk/cnr to download online. Fill in this formand submit it either online, or by post to your local tax office;HMRC’s website provides the addresses of local offices. Because HMRC calculates your annual income tax dues over a 12 me&my easy option Enjoy a great rate and easy access. Licensed by the Isle of Man Financial Supervision Commission to conduct Banking Business. For more information from our advertisers or about products featured in Expat Investor enter the Fast Facts number onto the Reader Reply Service coupon on page 20 or go to: expatinvestor.com Fast Facts 88000 month period, you may qualify for a tax rebate on the basis that you have paid too much tax in the months prior to your departure. 2) Let out your UK property An empty property is an investment wasted. A well let property is a painless way to pay a mortgage or accumulate extra cash. To make the most of your letting, take advantage of HMRC’s Non- Understanding domicile is essential for any UK expats living abroad. A person’s country of domicile has significant implications in terms of an individual's liability to a range of UK tax, from income tax to capital gains tax (CGT). A person’s country of domicile will also determine the amount of inheritance tax (IHT) they will pay in the future and could influence how their estate is taxed on death. This article focuses on the general concepts surrounding domicile and UK inheritance tax. It is likely that British expats living abroad are considered domicile in the UK,even if they are not current residents. What is domicile? Domicile is a concept of general law and is distinct from nationality or residence.Whilst it is possible to be resident in more than one 24 EXPAT INVESTOR ? What is domicile of origin? The domicile oforigin is acquired at birth,and is normally that of the father. If the domicile of the father changes, the child’s domicile will change in place of their domicile of origin, known as domicile of dependency. The domicile of origin can quarters (76%) admitted missing aspects of life back in the UK and said they felt homesick some or all of the time. The hardest thing for expats seems to be the physical gulf between themselves and their families and friends. They also missed British traditions and culture. Yet while some Brits completely integrate with the country they have moved to, a significant proportion (53%) nurture their British roots and feel their sense of Britishness increases. Language and culture prove to be the major hurdles when settling in countries such as Singapore (90%) and the UAE (95%) where over nine out of 10 expats felt their sense of Britishness had increased (see table). Mr Isley adds, “Expats may miss certain aspects of the UK, but modern technology such as the Resident Landlord’s Scheme. This will enable you to receive your rental income gross of tax. The formto submit is NRL1. This can be downloaded from www.hmrc.gov.uk/cnr. Introduce yourself to two or three managing agents via the Association of Residential Landlords Agency (www.arla.co.uk) 3) Draw up a Will The UK’s Foreign and Commonwealth Office (FCO) advises Brits going overseas to make a Will beforehand. You’ll need to ascertain whether this Will is valid in your host country 6.50% eAccess2 Offshore internet banking for expatriates The interest rate quoted is variable, gross and effective from 3 July 2008. Monthly interest available at 6.30%gross p.a. (AER 6.49%). This account is only available online to individuals aged 18 or over and is not available to UK residents. Bradford& Bingley International Limited, International eSavings Unit, POBox 263, Douglas, Isle of Man IM99 2JJ British Isles. Registered in the Isle ofMan No. 052221C. Registered Office: 30 Ridgeway Street, Douglas, Isle of Man, IM1 1TA. Copies of ourmost recently audited accounts are available on request. Bradford & Bingley plc undertakes to discharge the liabilities of Bradford & Bingley International Limited in so far as the latter is unable to discharge them and remains a subsidiary of Bradford & Bingley plc. Under Isle ofMan legislation, eligible depositsmade with an Isle ofMan office of Bradford & Bingley International Limited are covered by the Depositors Compensation Scheme contained in the Banking Business (Compensation of Depositors) Regulations 1991 (as amended). AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid to the account once a year.This advertisement does not constitute an invitation tomake deposits in any jurisdiction to any person to whom it is unlawful to make such an invitation or offer in such jurisdiction. Interest rates are variable. Your tax position will depend on your personal circumstances and you may wish to seek guidance from your tax adviser. It is the responsibility of the depositor to declare any interest received to their relevant tax authority. EU residents who are subject to retention tax by way of the EU Savings Tax Directive will need to consider the effect of the retention tax that will be applied to their accounts. Gross/p.a. .. Interest available Annually, Monthly or Deferred . Deferred interest for tax planning . Internet Savings Account Minimumbalance only £1,000 . Great for regular savings Apply online now at www.bbi.co.im differ from the country of birth, as it follows the domicile of the relevant parent. Under the general law,you will retain your ‘domicile of origin’ until either a ‘domicile of dependency’ or a ‘domicile of choice’ is acquired. October 2008 country, it is not possible to be domiciled in more than one country. Generally speaking, this means that a person will be domiciled in the country in which they have their permanent home. Who can change their domicile? From 1 January 1974, any person in England,Wales or Northern Ireland who is married or over the age of 16 years is capable of acquiring an independent domicile – a domicile of choice. What is domicile ofchoice? An individual can try to acquire a new domicile (a domicile of choice) by settling in a new country with the intention of living there permanently. internet, satellite TV and cheap travel have allowed British culture and entertainment to be easily accessed all around the world. International Brits are able to seek a better quality of life abroad but at the same time can keep in touch with good old Blighty.” COUNTRY %OF EXPATS WHOSE SENSE OF BRITISHNESS HAS DIMINISHED 1. CANADA 48 2. NEW ZEALAND 32 3. SPAIN 30 4.FRANCE 22 5.PORTUGAL 17 6. ITALY 12 7. NORWAY 8.SINGAPORE 0 9. SWEDEN 10. UAE 7 0 0 and to take appropriate professional advice if it is not. The FCO has a list of English- speaking legal professionals operating globally who can advise on this. Visit www.fco.gov.uk. 4) Consult an Independent Financial Adviser Make sure your money is working for you whilst you’re away. A good IFA (one who’s a registered member of the UK’s Financial Services Authority – FSA) will help you tidy up your existing financial arrangements and advise you about long-term tax planning and future investments. How is a domicile ofchoice acquired? There are no fixed rules as to what is required to acquire a new domicile and the burden falls on the individual to prove they have acquired a new domicile. Living in another country for a long time and disposing of assets in the country in expatinvestor.com which you were previously domiciled may help, but does not prove a new domicile has been acquired.HM Revenue & Customs (HMRC) makes a judgement after reviewing the ties with the domicile of origin and those with the domicile of choice. It is unlikely that a domicile ofchoice will be acquired if there are still ties (other than insignificant ones) with your domicile of origin. An objective intention to remain in a new country needs to be proved by actions such as: ? establishing a permanent home in the new country ? gaining citizenship or nationality in the new country ? establishing a business or getting a job there ? having children educated there. What is inheritance tax (IHT)? IHT is a cumulative tax payable in the UK. It applies to transfersmade How does an individual’s domicile determine the extent to which their estate will be subject to UK IHT? The general position is as follows: ? for UK domiciles – IHT applies to property situated both in the UK and worldwide. ? for non-UK domiciles – IHT applies to property situated in the UK only. Where both spouses or civil partners* are UK domiciled, or where the individual making the transfer of value is non-UK domiciled but the spouse or civil partner is UK domiciled, a transfer between spouses or civil partners is exempt. However, ifthe individual making the transfer of value is domiciled in the UK but the spouse or civil partner is not, the exemption is limited to a total value of £55,000 once, that is, during life or on death but not both.This exemption is available in addition to the nil-rate band amount. (*As defined by the Civil Partnership Act 2004.) How is a person’s estate calculated for IHT purposes? If you are domiciled in the UK, IHT will apply to your property wherever it is situated in the world. If you are domiciled outside the UK then the tax will only apply to your property (for example, stocks, shares, yacht, real estate) located in the UK. A person’s estate includes the total of: ? everything owned in their name ? their share of everything owned jointly ? assets (which include both immoveable and moveable property) held in trust from which he/she gets some personal benefit ? gifts from which he/she keeps back some benefit (gift with reservation). Issues of domicile can be complicated and there are a number of opportunities surrounding domicility. Seeking advice from a financial adviser will ensure that you take the best advantage of this area of financial planning and that you make the most of your domicile status. To find out more about Skandia International enquire through the fast facts number below. Fast Facts 88470 EXPAT EXPATEXPAT www.expatinvestor.com To register for Expat Investor digital edition, visit the website at