There are lots of reasons for leaving the UK – many Britons choose to move overseas every year to work, escape tax, retire or enjoy a different lifestyle and climate. But what are the key things to consider ahead of leaving the UK? Peter Webb, our Head of Tax Advisory, shares some thoughts.
Leaving the UK can be an exciting time, but it’s no surprise that it’s a big step, and there are a range of considerations and decisions – financial and otherwise – to make before you head to your new home.
One of the most important issues is the impact of your move on your tax status. If you become non-UK tax resident you’ll be exempt from UK Income Tax on anything you earn overseas (technically known as non-UK sources of income). Generally, you’ll also be exempt from UK Capital Gains Tax provided your residence status spans at least five complete years, although some caveats apply. But it’s simply not enough to move overseas and expect to be automatically out of the UK tax system; those days are long gone. It’s important to understand the date you become UK non-resident when you plan to live or work overseas. Under the complex Statutory Residence Test there are three cases of Split Year Treatment that can apply in the tax year in which you leave. Understanding these conditions will help you achieve and maintain a non-UK tax residence status.
It’s likely you’ll also need to consider what to do with any UK property you already own. You may be happy selling the family home, but you might prefer to let it out to keep hold of a foothold, ahead of a possible return. If so, you need to be aware of the UK tax implications and reporting requirements for letting out a UK property while you’re overseas.
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Some of the wider financial practicalities need some thought too. Consider your pensions and investments – it might be you can take advantage of some offshore schemes, and don’t forget to update your Will, particularly if you have children. As well as a UK Will you may also need a Will in the country you are resident in. You may also need to ensure you’re still making National Insurance contributions if you’re planning on drawing a full State Pension in years to come.
And don’t forget those practical steps – relevant visas, registering to vote abroad, selecting schools if necessary, updating your contact details and getting your family and possessions shipped overseas. Finally, don’t forget to do that important job of actually telling HMRC you’re going.
Establishing yourself in a new country needs some thought too. You’ll perhaps want to take some time to visit the area or speak to others who’ve made the move before you take that final step. Once you’ve left the UK, you’ll need to register your tax residence in your new home country, as well as consider medical insurance, banking arrangements and currency transfers alongside other important decisions such as where to live.
Leaving the UK offers a chance to explore a new country, culture and working environment. Planning ahead leaves you free to enjoy your new lifestyle and the experiences it offers. Our new guide to leaving the UK (link) is a practical tool to help you consider what steps to consider.
To discuss your plans, please contact your nearest office.
