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A plan for expat living

Elliott Prescott explains how planning your finances as an expat ensures that you can maintain a great lifestyle and plan properly for the future.
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Published 23 July
3 mins

It’s remarkable to believe that only two years have elapsed since relocating to Dubai. After living in London for seven years prior, I didn’t think that much could compare to the lure of such a vibrant city. However, Dubai certainly took me by surprise. The only notable difference is that here I have to opt for unlined suits due to the intense heat, which is a sacrifice I was happily willing to make! 

The largely expatriate society (making up more than 88%* of the current population of the United Arab Emirates) offers a culturally diverse pool for networking and socialising, and I have chosen to immerse myself fully. While it is easy to be led astray by the high standard of living, the attractive benefits such as tax-free income has allowed me to remain focused on my financial targets for the future.

Whatever your reasons are for choosing the expatriate path, whether you are on a work secondment, a retiree or have just escaped to sunnier climes, having an effective financial plan can help you maintain your lifestyle and ensure your diverse financial assets are working together for your future.

 

Establish your goals

The best place to start with your plan is by understanding what you want from life. Your life goals can usually be split into short, medium and long-term aims, and they should be specific to you, but need to be reasonably achievable. It often helps to see a list of typical goals to help you focus on what is most important for you and your family, for example:

Short term

Up to five years

Medium term

Up to 10 years

Long term

Over 10 years
Buy a UK holiday home(Early) Retirement
Consider extending time overseasBecome a consultantBuy a large rural home
Save for retirementLong-term health care
Support aging parentsSupport children until financially independentPay for grandchildren’s education

By prioritising your goals and a timeframe for achieving them, you will be able to estimate how much money you will need and when. This will form the roadmap for your plan and you can start to manage your finances in the most effective way to attain your goals.

Make a plan

Making a plan means you should record your current income and living expenses, and calculate how much money you have available to put towards achieving your goals. It is unlikely your income will remain the same over your lifetime, so this is also something you can build into your financial plan. You should also consider other sources of income you may have over time from investments, your pension, or perhaps an inheritance. Against these, you need to include the costs and timing of your short and medium-term goals, such as buying a second home, paying for children’s education or returning to your home country.  

Making a move

Do you plan to return to your home country at some point? If so, you will need to start planning well ahead to ensure the move is seamless and tax efficient. Your financial situation as an expatriate may no longer be applicable if you become tax resident in another country, so a review of the potential implications is vital. Tax treatment depends on your individual circumstances and may be subject to change in the future so it is important to get specialist advice. While we don’t give tax advice, we have the experience to point you in the right direction, not least as it makes sense to look into the tax payment schedule for your new destination.

For example, if you intend to move back to the UK, it pays to keep up your Class 3 national insurance contributions. In addition, you should beware of spending too much time in the UK in preparing for your move, as you could accidentally bring forward the start date of your UK tax residence status. Residency can be triggered after just 16 days in the UK, if you have been a non-UK resident for less than three years. Otherwise, you may become resident after 46 days of a tax year, but the lower level of 30 days if you are staying in a UK property that is considered to be your main home.

If you are considering a move to warmer climes, Hong Kong is a popular choice and when you are finally presented with a bill, you would also have to pay tax a year in advance, but you could opt to buy tax reserve certificates, if you are too used to PAYE to put money aside. The high cost of living in Dubai, Hong Kong and Singapore can be a deterrent for the long term, but if you can’t bear the thought of cold, grey winters in the UK, you could opt for an investor visa and switch to working in Australia for a while, before retiring there or moving to sunnier climes in Cyprus, Gibraltar or Malta.

If you have any assets that have risen in value, you may consider selling them with a view to ‘crystallising’ those gains before you become tax resident in another country.

You should also review any existing pension or investment arrangements to ensure they remain in line with your goals. If you plan to return to the UK, it is worth considering the use of tax-efficient investment structures, such as ISAs and single premium life insurance bonds. If you have a qualifying recognised overseas pension scheme, you must inform your provider if you intend to move to a different jurisdiction.

Tax is, however, just one consideration. Other factors such as to how to fund your lifestyle, buy a property, manage succession planning and pay for health care and children’s education should all be factored into your plan.

Staying on track

It is never too soon to set up a financial plan, but once you have, it does not mean your work is done. It pays to review it regularly to ensure it still aligns with your current situation and remains on track to meet your goals. That way you can continue to enjoy an international lifestyle, while knowing your wealth is working towards your future goals. 

about the author

Elliott Prescott

Elliott Prescott

Elliott joined Nedbank Private Wealth in 2018 after relocating to Dubai from London, where he worked for Kleinwort Hambros Private Bank. He has six years’ international private banking experience, having worked in London, Jersey, Guernsey, Gibraltar and Paris.

 

Elliott is responsible for driving the growth and awareness of Nedbank Private Wealth across the UAE region. He has a strong understanding of clients’ different requirements and is passionate about developing holistic relationships, which enable him to provide a truly tailored private client experience. Elliott is an Associate of the Chartered Institute for Securities & Investment.

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