Thousands of families and pensioners are planning to move abroad to escape Labour’s tax hikes, and it’s hard to blame them given the misery coming our way.
Rachel Reeves outlines likelihood of tax rises in October
However, Brits should plan carefully before making the great escape. Experts warn that becoming an expat is complex and hasty plans could backfire.
One in 10 wealthy families are considering moving abroad to avoid the rising costs of private education, according to Saltus Wealth.
Many middle-income familes are also looking to avoid potential raids on capital gains, inheritances and pensions in the autumn Budget.
Russell Gous, editor-in-chief of TopMoneyCompare, said moving abroad may cut your tax bill but hidden pitfalls could cost you in other ways. “Families need to be aware of the financial implications of relocating, particularly currency risk when transferring large sums internationally.”
Avoid pricey high street banks and consider using a specialist currency transfer service. “Otherwise the costs of moving abroad could outweigh any money you save on school fees.”
That’s only the start of the challenges Brits face when looking to up sticks and move overseas.
Don’t quit the UK in a fit of pique, make sure your sums add up. Make sure you understand the tax implications, too.
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If you decide to sell UK-based assets when you leave, you may have to pay tax on them, for example, a second home or buy-to-let property sale may incur capital gains tax (CGT).
If your property transaction doesn’t complete until after the Budget, you could end up paying CGT at a higher rate than today, depending on what chancellor Rachel Reeves does on October 30.
Cutting links with HMRC isn’t easy.
If you plan to retain a property in the UK and let it out, then you may still have to pay UK tax on the rental income, and potentially CGT if you sell it later.
You may also have to complete a self-assessment tax return over here, as well as declaring tax in your new country.
This could involve completing two tax returns and paying for two lots of tax advice.
Pension withdrawals may be complicated and you will need specialist advice to work out where you pay tax on the money.
In some countries, including Australia, New Zealand and South Africa, your state pension may be frozen at the level paid when you left.
This steadily erodes its real value over time causing endless misery for more than half a million British expats with no respite in sight as the government refuses to change the rules.
