These are some of the main benefits you will need to consider how you will replace them or if you can afford/budget for them.
- Tax-free ISA status
- National health service
- Tax efficient Pension plans
- You will have to change to class3 national insurance payments to bridge any gaps in your State Pension.
- Company Pension Scheme frozen
Please see below for a detailed explanation and a detailed breakdown of what happens.
Lastly, we have included a handy mind map for when you decide to leave your home country.
Corestone is with you every step of the way.
HM Revenue & Customs
You might think that if you leave the country, there will be no more paying taxes at home. Alas, no. British expats may be exempt from certain additional taxes, but that doesn’t necessarily mean they pay no income tax in the UK. What you have to pay depends on your personal circumstances, how, where and whether you are being paid, and where your financial assets are; if you are working, you may also be liable for national insurance. To ensure that you pay the right amount, you must fill in a P85 form on the HMRC website and include parts 2 and 3 of your P45 form from your employer. If you usually fill in a self-assessment tax return, perhaps because you’re self-employed, you can use this instead. You could be fined for not completing a tax return yearly should HMRC believe you need to. If you are working full-time for a UK-based employer for at least one year, send a P85 and a tax return.
UK homeowners considering renting their properties out and who live abroad for more than six months of the year are classed as non-residential landlords and must join the Non-Resident Landlord Scheme (NRLS). This is the system by which tenants and letting agents in the UK pay tax on behalf of landlords abroad. Paying tax as an expat can be complicated, so it’s worth speaking to a financial expert who specialises in this area and understands the rules of your home country and the country you are moving to.
International Pension Centre
Suppose you have paid enough UK national insurance contributions to qualify. In that case, you can claim a state pension even if you live abroad – but you will need to inform the International Pension Centre first.
You are typically required to have a permanent UK address if you hold an ISA, so you may not be able to continue paying into it if you move abroad – though that doesn’t mean you should switch your money out of this tax-free savings vehicle. The Financial Conduct Authority only really offers consumer protection for financial services for people living in the UK. It is best to speak to an independent financial adviser about your options.
To gain access to the healthcare system in your new country, you will probably have to register with the relevant authorities as a resident. Once you are working and making social security (national insurance) contributions, you should be entitled to the same state-run healthcare as a resident of that country would be entitled to. Some countries expect you to make contributions, even if you are not working, to join a national healthcare scheme.
If you are in an EU country temporarily, up to 90 days, you can still use your UK-issued European Health Insurance Card (EHIC) or UK Global Health Insurance Card (GHIC) to access healthcare. However, once you live in an EU country, you should return your UK EHIC and replace it with the equivalent in your new country for travel purposes, where possible. If you move abroad and are in receipt of a UK state pension, then you may be entitled to have your healthcare paid for by the UK; to receive this, you will have to fill out an S1 form once you start drawing your state pension.
You will not be covered for healthcare paid for by the UK if you’re going to live permanently outside the EU – although Britain has agreements in place with many other countries, so check first what healthcare provision you can expect. You may need to take out private healthcare insurance.
Pensions are not just a concern for those retiring abroad but for anyone who has been making national insurance contributions or has a private or workplace pension. There are several options open to you – if you are not yet at retirement age. You can leave your pension invested in your current UK plan until you can withdraw money from it – currently, at the age of 55 (57 from 2028). You can transfer your pension to a scheme abroad, or you can pay into a UK scheme from your new country of residence. British citizens can be members of a UK-registered pension scheme regardless of where they live or where their employer is based, but you may find the tax benefit to be limited or non-existent. There is more information on the Pensions Advisory Service website.
In terms of your state pension, you can live in another country and receive your pension if you have contributed the required national insurance contributions – although you will only get an increase every year, in line with the triple lock, if you live in the European Economic Area or a country that has a social security agreement with the UK. In addition, it may be possible for you to pay voluntary Class 3 NICs if you need to fill in any gaps in your NIC record, but you need to call HMRC Residency on 0191 203 7010 for further information.
Again, if you are unsure how your move will affect your long-term financial planning, it is best to speak to an independent financial adviser.
Corestone have fully qualified advisers (UK FCA exams) that are here to help, whether it’s the state Pension, a projection on your current plan, or you need our help with completing your annual self-assessment; we believe that good financial planning starts with the basics.
Contact us to make sure you are protected as an expat.