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Your tax status
Checking your tax status in advance of your move is
crucial - especially if you leave the UK part-way
through a tax year, as you may be entitled to a tax
rebate.
Your bank account
You’ll need to open a local bank account. To
do this, you will usually need to present various
identifying documents, such as your passport, birth
certificate, property deeds and residency permit,
and you will also need a letter of introduction from
your UK bank.
If you hold an account with one of the larger UK banks
with branches overseas, you may be able to open your
new account before you leave the UK. But even if you’re
moving to a country where your bank doesn’t
have a branch, they should be able to recommend a
suitable alternative. Otherwise, you can contact UK
branches of foreign banks to organise an account in
your new country of residence.
It’s essential that you open your new bank account
before you leave, because you’ll need to provide
account details to the DSS Overseas Department and
to your company pension scheme trustees and/or your
personal pension provider, so that your pension can
be paid overseas.
Your pension
You’ll also need to arrange to have your pension
paid into a bank account in your new country of residence.
The Pensions and Overseas Benefits Directorate of
the Department of Social Security can provide you
with the relevant forms. This needs to be taken to
the local social security office or government health
centre in your new home country, which will then arrange
for the transfer.
You could choose to have your State pension transferred
in one of two ways: either by using the Bank Services
Automated Clearing System (BACS), which pays your
pension directly into your local bank account in the
new country free of charge; or by order payable in
sterling, which may carry transaction charges.
And how much pension you get will be affected by where
you go to live. If you retire to another EU country,
your UK State pension will grow in line with any increases
made in the UK. But if you retire to most non-EU countries,
you may not fare so well.
If you have a personal or occupational pension, you
need to contact the scheme trustees or plan provider
to arrange payment in a new country. Payments will
usually be made in sterling, which means you’ll
have to pay transaction charges to convert your pension
into local currency. Some providers may make payments
in the local currency but you could end up paying
an annual fee.
Your investments
Any income you receive from UK investments is generally
subject to UK income tax. But you may be able to gain
exemption or partial relief from UK tax if your new
country of residence has a double taxation agreement
with the UK. These agreements may allow you to pay
tax on income in your new country, instead of paying
UK tax.
Some tax-free investments could become taxable in
the UK when you become a non-resident. UK investments
that don’t offer tax-free returns, such as unit
trusts and investment trusts, will be unaffected by
any change in your tax status so you could continue
to invest in them, and pay UK tax on them, as before.
In some cases, though, once you are based in a new
country of residence you may want to consider changing
your investments. You may even find it more tax-efficient
to switch your UK unit trusts, open-ended investment
companies (OEICs) and investment trusts into foreign
investment funds. Alternatively, you may prefer to
use offshore funds and pay the tax due on them in
your new country of residence.
Your insurance
Any life insurance cover you hold in the UK will remain
valid when you become an expatriate, provided you
continue to pay the premiums and there is no specific
country exclusion in the policy. So you shouldn’t
have to take out new life cover, though you should
inform your insurer of the change in your circumstances.
If you still own a property in the UK while you are
living abroad, you will usually be able to continue
with the buildings and contents policies you took
out to cover it. But if you leave the property empty,
your insurance cover may be reduced as it poses a
much greater insurance risk.
You may be able to extend your existing UK household
insurance policies to cover your new property abroad
- but you will need to check this with your existing
insurer.
Your healthcare
Most EU countries operate a healthcare system similar
to the National Health Service (NHS) and these services
are available to UK expatriates. But what is covered
by these state systems varies from country to country.
Standards vary greatly, too.
So it makes sense to consider private medical insurance
(PMI) when retiring abroad. If you already have a
PMI plan in the UK, check to see if you can transfer
it to a local plan free of charge and without any
loss of benefit.
(article
dated 1/11/03)
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