What does 2015 have in store for you? For some readers, 2015 will be the year they leave Portugal. You may be a British expatriate who is returning to live in the UK, or you could be moving on to a completely new country.
Even if you have no expectations of leaving Portugal right now, this may change in the future. In my experience, many UK nationals do eventually go back, for example, when grandchildren come along and they wish to be closer to family, or after the death of a spouse.
Many people leave it until they have become resident in their new country before seeking advice on the most tax-efficient manner to hold their assets and investable wealth. In some jurisdictions this does not create too much of an issue, but in others waiting until after they have become tax resident could mean they miss out on the most tax-effective solutions.
British expatriates returning to live in the UK may be able to take advantage of their current non-UK resident status to carry out tax and wealth management prior to their return, so that once back in the UK they can enjoy tax advantages which would not be ordinarily achievable by UK residents.
By taking appropriate advice before you return, you could arrange your investable assets in a manner where you can enjoy tax-free growth and income as a UK resident, irrespective of how much money you invest. Other than the limited National Savings Certificates, Premium Bonds and annual ISA allowances, other mainstream UK investments available to residents do not come close to the tax benefits returning expatriates can enjoy, provided they plan early enough before their return.
You would also need to consider your pension funds, particularly if you have a Qualifying Recognised Overseas Pension Schemes (QROPS).
The old adage is always true – it is never too early to start planning.
You may find you have limited time to put the necessary appropriate tax and wealth management arrangements in place before your return. So, for peace of mind, you can take advice and review your financial planning now, to ensure it is structured in the best possible way should an unanticipated move take place.
You may find that by doing so you have improved your tax position here in Portugal, so that you are already protecting your wealth from unnecessary taxation.
The key to making this planning most effective is to start as early as you can, even if you do not yet know when you will leave Portugal. If you do not return to the UK but have improved your local tax position, that is a bonus.
It is therefore essential to take advice from someone who has in-depth knowledge of both the Portuguese and UK tax regimes, and how they interact.
We are becoming more transient these days and it is common for British expatriates to leave the UK, settle in one country and then move onto another. Just as some of the most effective ways to save tax for those who return to the UK should be established before they go, the same applies to people who move elsewhere. It is a case of planning before you move, and planning early. Effective tax planning is all about flexibility and adaptability.
Seek advice from an international tax and wealth management company, who can provide up-to-date information and guidance on the country you are moving to as well as Portugal.
You may never return to the UK yourself, but what happens when your money does?
Most British nationals retain their UK domicile even though they may have lived overseas for many years. If HM Revenue & Customs can find evidence to create and support a view that you had an intention of returning – even though you did not – it will assess your worldwide estate for UK inheritance tax. This is a complex area where you need specialist advice to avoid or mitigate the inheritance tax liability for your heirs.
Even if UK inheritance tax is not an issue for you, your money will eventually find its way back to the UK if your heirs are UK resident. You may be able to plan for this during your lifetime while you are an expatriate, to ensure that after your death your assets are held in a tax effective manner for your family and any other beneficiaries who you may wish to benefit from your estate.
Whether you are moving back to the UK or to a new country, or want to protect your heirs from tax, it is never too early to seek specialist advice. Do not risk missing out on valuable tax planning opportunities.
By Gavin Scott
|| features@algarveresident.com
Gavin Scott, Senior Partner of Blevins Franks, has been advising expatriates on all aspects of their financial planning for more than 20 years. He has represented Blevins Franks in the Algarve since 2000. Gavin holds the Diploma for Financial Advisers. | www.blevinsfranks.com
Will you or your money return to the UK at some point? Take tax advice now.
