Should I stay, or should I go?
As the claims and counter claims fly back and forth between politicians over what shape the UK will be in after Brexit, where does that leave the expat community, especially European-based expats?
If you fall into this camp, should you run for the hills or batten down the hatches and weather the storm? What’s the best tactics to adopt?
Of course, nothing bad may come of Brexit and the new world order that will face the UK in its aftermath.
But, presently, the prospect of a property crash, a run on the pound and savings going to the wall – however remote the reality of this may be – is clearly of deep concern to many Brits, who moved abroad and who are now questioning the wisdom of doing so.
With UK expats deserting places like Spain, in their tens of thousands over the last couple of years, have they made the right decision? Is quitting the right course of action? Knee-jerk decisions could actually leave people in a far worse position financially than they currently face.
1. Getting your affairs in order whilst you are offshore
For many UK expats, either at or nearing retirement age, the dream abroad appears to have turned sour, as evidenced by the huge numbers selling up and abandoning a life in the sun.
Whether you have a) settled in Spain officially and put down roots and cut the cord years ago with the UK, or b) been less committed to fully integrating with the Spanish way of life but have, nevertheless, not intended to return to Britain – either way, we would strongly advise getting your ducks in a row whilst you remain offshore.
Certainly, you should do so before you set foot back into the UK for good – if the UK is your intended destination.
Do not cut and run before getting your house in order. If you wait until you’ve stepped off the plane in the UK before fully addressing all the implications, you may well have unwittingly added to your financial woes.
Better to have a clear plan in place before deciding on making any move – whether that be back to the UK, or to another jurisdiction. (if you need help finding professional advisors in your area, we can help)
1. Getting your affairs in order whilst you are offshore
For many UK expats, either at or nearing retirement age, the dream abroad appears to have turned sour, as evidenced by the huge numbers selling up and abandoning a life in the sun.
Whether you have a) settled in Spain officially and put down roots and cut the cord years ago with the UK, or b) been less committed to fully integrating with the Spanish way of life but have, nevertheless, not intended to return to Britain – either way, we would strongly advise getting your ducks in a row whilst you remain offshore.
Certainly, you should do so before you set foot back into the UK for good – if the UK is your intended destination.
Do not cut and run before getting your house in order. If you wait until you’ve stepped off the plane in the UK before fully addressing all the implications, you may well have unwittingly added to your financial woes.
Better to have a clear plan in place before deciding on making any move – whether that be back to the UK, or to another jurisdiction. (if you need help finding professional advisors in your area, we can help)
2. Consequences of moving back to the UK
Whilst the UK might appear to be a safe haven, or at least a safer option at the present time, the repercussions of moving back to Blighty could be far reaching and financially crippling.
UK Inheritance tax – amongst others!
Just because the UK is your home country, from a tax and financial planning viewpoint, there’s plenty at stake! For one thing, you will need to consider your domicile. If you’ve worked hard to remove yourself from the UK and been outside the clutches of the HMRC for a considerable time, returning could be of great interest to the British tax authorities. For instance, if you thought you’d stayed clear of inheritance tax up until now, this may well no longer be the case and could have a major impact on your family in the longer term.
It’s vital to address all the tax and wealth management issues you’ll inevitably face by returning to the UK. Your tax liability may differ to what you thought it was at the time you left and much will depend on your age and whether you are working or retired. But, if you had put yourself into a tax advantageous position by leaving the UK, this could all suddenly come undone.
Assuming you are now considering leaving Spain, here’s a snapshot of what you should look out for:
Tax Residency
The timing of your departure during the year will affect your residency status and this will have an impact on your tax position. According to your net wealth, be aware, too, of any exit tax that may apply,
Tax and Estate Planning
Moving from Spain to the UK, particularly where you’ve received income locally or owned a Spanish property, will necessitate a complete dissection of your tax status. This should also include a thorough estate planning review, to clarify your position in relation to future UK taxes, such as UK IHT.
Pensions
If you’ve enjoyed the benefits of a UK pension all the time during the time that you’ve lived abroad, it will be important to establish how this may be affected at the point you become liable to UK taxation.
Foresight
The golden rule has to be: don’t rush into a decision without taking proper professional advice. This will give you the opportunity to make informed decisions and weigh up all the consequences before jumping ship.
If you are considering leaving Spain, or any part of Europe, due to the current Brexit debate, at Sterling Trust we have decades of experience assisting UK expat clients who live offshore. Amongst our services, we prioritise tax efficiency, income protection and wealth management solutions.
In the current climate of uncertainty, our Foresight suite of products could provide a useful first step. Foresight includes a tax health check, IHT planning, probate and wealth preservation – to help you make informed decisions about your future.
It might just help you enjoy a pain-free exit from Spain.
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