Non-res status: how do you achieve this? Part 1

You would think that once you have left the shores of the UK and emigrated you would have cut the ties that bind…especially those pesky tax ties! Unfortunately it’s not that easy.

In the past, providing you were in the UK for a certain length of time only, you were no longer considered a resident. Your absence and employment from the UK had to cover a complete tax year (that is 6 April to 5 April), you had to spend less than 183 days in the UK during the tax year and your visits to the UK should not average 91 days or more a tax year over a maximum of four years.
But things have changed and HM Tax and Revenue Services are becoming far more demanding – and watchful.

Just moving overseas won't be enough to establish that you've got a new domicile. Essentially you need to show that you've severed your UK ties totally and that you are living overseas on a permanent basis. There's a burden of proof and it is not something that is easy to convince the tax man of.

So…how do you make sure that you qualify for non-resident status? A suggested checklist of what you need to do: let’s start with

Property in the UK:
-Sell your UK property or let it out for at least 12 months - do not leave it unoccupied
-If you are letting the property, ask a UK agent to deal with the property on your behalf
-Pay all property bills before you depart the UK
-Notify your house insurers that you are emigrating and adjust the insurance accordingly
-Notify your mortgage lender that you are emigrating
-Notify your local council that you no longer reside at the property
Business matters in the UK:
-Consider resigning from any UK company directorships or company secretarial positions
-Consider disposing of your UK business interests altogether
Other UK matters:
-Notify your UK doctor and dentist that you have left the UK
-Cancel your UK sporting and social club memberships
-You would be wise to appoint an attorney in the UK who is empowered to deal with your UK affairs

I am going to continue with a few suggestions next week on matters relating to taxes and finance…and more.

Kim Brown
The Overseas Guides Company
Visit my website at: http://www.emigrationguide.com/

Now You Can Increase Your Pension Income by Moving it Overseas!

When living, emigrating or retiring abroad there are very important matters to consider concerning the amount of income that you and your family will receive.

British pensions – when paying out – are now deeply unattractive. The income generated by a pension is restricted by the fund. Only 25% of the fund value is available as a tax-free lump sum. The annual/monthly amount paid is taxed at source. The pension holder is forced to take out an annuity whether they need it or not. And sadly, a major proportion, if not all, of the final proceeds on death often disappear back to the insurance company rather than going to loved ones. Add to all this the ‘black holes’ (underfunded company schemes) that abound and the situation is indeed dire.

Many people are interested in alternatives. They’d like to have the option to increase the amount of overall income they receive and to be able to leave ALL unused pension funds to their partner and/or children. Many don’t want to be forced to invest 75% of their pension into an annuity that may produce deplorable or at best limited returns.

People want to have more control over their pension pot and remove the UK governments’ ability to dictate what they do with it. In the current risky financial climate many find themselves asking, “Do I want to run the risk of my former employer screwing up my pension funds by creating a massive pension deficit that they can’t fund...and then going bankrupt and bringing down my pension fund with them?”

Fortunately, if you’re going to emigrate or no longer live in the UK, there are excellent alternatives available. In 2006 new EU legislation opened up opportunities for UK pension holders to move their pensions overseas, thus giving greater control to the pension holder. However, the UK authorities will only allow you to transfer a pension abroad if the scheme meets certain criteria. Firstly you need to be living, or going to live, abroad and secondly you must remain living abroad.

Whilst you don’t have to reside in the same country, the scheme needs to be registered with an authorised trustee within the legal jurisdiction of the country it’s based in such as Spain, America, Australia, Guernsey or Hong Kong. Also, it must be a true pension scheme, not a vehicle that simply allows pension holders to access all their funds immediately, tax free.

The benefits of a Qualifying Recognised Overseas Pension Scheme (QROPS – pronounced Crops) can be extremely advantageous. It may be possible for you to:

Eventually take out the majority of your fund by the time you reach retirement over and above the UK’s 25% threshold

Set it up so that any unused pension monies can be left to your heirs – not your annuity provider or your previous employer’s fund

Avoid UK income and inheritance taxes

Receive income in a more tax efficient manner than offered in the UK and/or have more freedom with your investments rather than having to follow set UK procedure (diversify investments)

Take income from the currency of your choice avoiding adverse exchange rate conversions

Avoid having to buy an annuity (when you die your annuity goes with you, meaning that the hard work that helped you create your pension does not get passed to your beneficiaries)

The good news is that getting a QROPS can greatly benefit anyone planning to move overseas or those who have already moved. The not-so-good news is that it takes 5 years of being a non-resident and moving the pension for a QROPS to show real benefits. That’s why it’s important to consider your options now rather than later.

After your pension scheme has been transferred and you’ve been non-resident outside the UK for 5 years the QROPS Trustee no longer has to report any withdrawals or payments to the HMRC. This is when the relevant overseas jurisdiction takes over and UK laws such as the requirement to buy an annuity by age 75 (or be faced with an 82% tax charge) no longer apply.

After the 5 years, QROPS arrangements can offer more flexibility, greater income potential and more investment potential than a UK pension. Furthermore, it’s amazing what can be done with regards to various tax benefits.

To get the full QROPS guide please email me at: emigration@overseasguidescompany.com

Kim Brown
The Overseas Guides Company
Visit my website at: http://www.emigrationguide.com/

What is the cost of living looking like abroad?

It’s no secret that the cost of living varies dramatically between countries. For instance, every country that has joined the EU has seen it’s cost of living rise quite dramatically…but then they have also seen their standard of living rise too so I suppose it’s a case of swings and roundabouts.

When you decided to emigrate I am sure that you looked at costs, including those to buy property and to move, but did you factor in the day to day cost of living? This can make quite a difference in your life style, to where you live and how you live. It would take more space than I have here to discuss each and every country in detail, but I have a few pointers that you may like to think about.

Food
In many countries, such France and Portugal for instance, although food can be costly in the main cities it is usually much cheaper in more rural areas. You may also find that there you will be able to buy fresh produce locally, which will dramatically reduce the bills. My colleague Alexis, who has a home in France, visits the local weekly market to buy fruit and vegetables and says that the savings are quite dramatic. However it bears remembering that in, say, Greece, the islands - although many are rural - are sometimes more expensive as goods have to be shipped in. These are the things that you need to find out in advance and factor into your plans before you buy.

Utilities
The costs will vary, depending on the size of your home, how many people live there and where you are located. There may, however, be more than one provider and perhaps a comparison exercise would throw up a cheaper provider. A word to the wise here: my son has a far cheaper telephone line than mine, but there is always a problem with it…what’s the use of that? Best case scenario is that you chat to a local.

Schooling
If you are moving within the EU you may find that free State schooling is available. But how good is it? And do you need to live in a more expensive or a rural area to access a better school? In South Africa for instance there are only a handful of State run schools that are rated as acceptable…and private schools really cost. This is the sort of thing that a good estate agent can give you the low-down on.

Health
EU countries have a State health care system that residents can use and that EU visitors can access for emergency health care if they have a European Health Insurance Card (EHIC). Other countries vary so you need to do your research here. Otherwise you need to pay for healthcare and this can prove very expensive.

Transport
Each and every country has a different transport scheme (or not…be warned!) and costs vary tremendously. You need to check this out carefully. In South Africa for instance there is virtually no public transport system at all. Plus it is not safe to walk…problem! Also, if one partner works and one cares for the children then you need two cars…and this cost needs to be factored in. Plus the registration, insurance, fuel, garaging thereof…

So you can see that ‘cost of living’ actually means the cost of living YOUR life. There may well be some things that are non-negotiable but there may be other things that you can compromise on in order to exchange your present life for one that you perceive to be better. The point is that you need to do your sums and take all the factors into account before deciding exactly where you are going to put your roots down.

To buy a copy of the Emigration Guide go to: http://www.EmigrationGuide.com/guide.htm

Kim Brown
The Overseas Guides Company
Visit my website at: http://www.emigrationguide.com/