As we ponder the prospect of travelling again, some people may be looking for something long term. After being hampered by lockdown, it will be no surprise if a taste for adventure gets people looking at living abroad. Add to that the greater number of jobs available to be done remotely, and you have a cocktail for an expat boom.
But hopping to another country is not always simple. If you are considering doing so, add these five money-related tasks to your to-do list.
1. Work out your tax status
Usually if you are staying for more than six months in a country, then you may be taxable overseas, though this can vary country to country. “The two key things to consider are residence and domicile,” says Daniel Hogan, the co-founder of the accounting automation company Ember. “If a person moves away from the UK, they may cease to be a UK resident but it is unlikely that they will cease to be UK domiciled.”
He explains that residence is determined each tax year by a step-by-step statutory residence test (SRT) for individuals. “If you move halfway through a tax year, the SRT does provide the possibility of a ‘split-year treatment’ in certain cases,” says Hogan.
“As a result, the individual will be taxed as a UK resident for the time they were in the country, and then taxed as a non-resident for the rest of the year. There are three main cases where split-treatment occurs: if someone starts working overseas full-time; if they are the partner of someone who is starting work full-time overseas; or if they no longer have a home in the UK.”
Britain has “double taxation conventions” in place with several countries, which should ensure that you have to pay tax only once on your income. If you are still not sure of your status even after looking at the Government’s website, you could ask Her Majesty’s Revenue and Customs (HMRC) for advice.
2. Consider opening a local bank account
Sarah Holt, of money transfer group Monese, says: “When it comes to banking in another country, it really does depend on your circumstances.
“Is your move permanent or temporary? Which currency will you be paid in? Do you have assets back home? Keeping your home bank account open is a sensible choice, as reopening a closed account can be a difficult process.”
But there is likely to be a benefit to having an account in the local currency if you are being paid in something other than sterling, because of currency fluctuations. Essentially, you want to make sure that the money you make in the country you live is going towards your lifestyle there, without being eroded by exchange rates.
Make sure to check what your current account provider offers. “Depending on who you bank with, it is possible to obtain a multiple currency account with your UK bank, such as Revolut or Wise,” says Hogan.
Unfortunately, many high-street lenders have reduced their offerings for those moving to the EU, because the “passporting” agreement between banks came to an end with the close of the Brexit transition period earlier this year.
This means that, rather than complying with one set of rules, banks must align with regulations in every country they want to operate in – and some have decided it is not worth it, especially if they have few customers in a particular destination. Some Britons living abroad have even been told that their home bank accounts are closing.
If you decide to get a local account, be aware of administration hurdles this might present. “Opening a local account can be difficult because banks often require you to prove that you are a resident locally, which can be challenging if you have just moved,” says Inez Cooper, the founder of the international insurer William Russell. “Consider opening an expat bank account, specialised for professionals living internationally, which many banks offer.”
3. Look at savings and investments
If you open a cash or stocks-and-shares Individual Savings Account (Isa) in the UK and then move abroad, you cannot put money into it after the tax year when you move (unless you are a Crown employee working overseas or their spouse or civil partner). You can still keep the Isa open, and continue to receive UK tax relief on it, but you must tell your provider that you are moving. It could therefore be worth thinking about maximising your Isa allowance in the time before you leave.
4. Sort out healthcare
“Post-Brexit, travelling between the UK and EU will no longer be as straightforward as it was,” says Cooper. “Healthcare is a particularly important factor to consider because if you move to the EU after the transition period, you will not be entitled to state-provided healthcare.
“You may therefore want to consider the benefits of international health insurance.”
Most people will be familiar with travel insurance that covers potential health bills should anything happen to you overseas. International health insurance covers longer periods of time and is available from a range of providers. However, before buying a policy, it is worth checking whether your employer can help with healthcare, or if your partner’s insurance may cover you as well.
You can also apply for a UK Global Health Insurance Card (GHIC), which will cover you while travelling in the EU. This replaces the old European Health Insurance Card (EHIC). Unlike the EHIC, the GHIC does not apply in Norway, Iceland, Liechtenstein or Switzerland. However, there is the possibility that new countries will be added to the scheme.
Tom Wilkinson, the chief executive of AXA Global Healthcare, advises anyone who knows that they might need medical care to carry out thorough research beforehand. He says: “The key to being prepared for healthcare costs abroad – especially if you have a pre-existing condition – is to ensure that you have a good grasp of the services and facilities available in your new home country.
“Both the standard and cost of healthcare will vary around the world, so it is understandable that many expats are concerned about the cost of medical treatment.
“It is important to prepare yourself for the different circumstances you might come across, and know if certain treatments are difficult to come by or particularly expensive.”
5. Work out how to send money home
Several financial services companies offer lower-cost international money transfers. Use a comparison website to evaluate the best rates and think about getting an account set up with one or two of the providers that look as if they will serve you well. Most are free to use, but might have additional charges for things like ordering a physical debit card.
“Look out for accounts that let you hold sterling and euros, and that can be set up in the UK before you leave,” advises Holton, of Monese. “These accounts should allow you to send and receive euro payments across Single Euro Payments Area (Sepa) countries. They include all the EU countries plus Iceland, Norway, Liechtenstein, Switzerland, San Marino, Monaco, Andorra, Vatican City and the UK.
“The benefit is that you can make and receive payments in euros without having to open multiple accounts and keep your link to the UK.”
Do you have any questions about moving abroad that you’d like us to get expert answers for?
Email alys.key@inews.co.uk
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