Expatriate living|Major life events|Money management
Thinking ahead when moving to the UK
Moving to another country can be a big upheaval and planning ahead is vital. Senior wealth planners Adrian Crowe and Yash Naidoo explore the financial aspects of moving to the UK, with a particular focus on tax planning.
Relocating to a different country involves various considerations from deciding where to live and settling into a new job to, perhaps, finding new schools for your children. While these can be daunting tasks, it’s important to consider your financial circumstances well in advance of your move to ensure you take full advantage of all the benefits available to you. In this article, we explore the financial aspects of relocating to the UK, with a particular focus on the tax implications.
In the UK, the way you are taxed by HM Revenue and Customs (HMRC) is based on your residency and domicile status. Your residency status is simply where you live, but your domicile status is a little more complicated. It’s generally based on where you originated – either where you were born or where your father came from – or it can be by choice, if you are over 16 and choose to live indefinitely in another country. A UK resident whose permanent home is outside the UK is known as a non-domiciled individual or ‘non-dom’, which is purely a description of their tax status and indicates they do not intend to live permanently in the UK.
The difference between residence and domicile is important. Individuals who are both UK resident and domiciled must pay UK tax on their worldwide income and gains. However, if you are a non-domiciled individual living in the UK you can choose to register your non-domiciled status, which means you will only be taxed on your income and gains earned in the UK. You will not have to pay UK tax on any income or gains earned overseas unless you bring that money into the UK.
A good understanding of UK tax legislation is essential, and your personal circumstances should be carefully considered with the help of tax professionals. Seeking expert advice will help you make more informed financial decisions when you relocate.
If you are living in the UK but don’t intend the move to be permanent, you can choose to be taxed only on your income and gains earned in the UK and those which you bring into the UK. This is known as the remittance basis of taxation, and it means any foreign income and gains remain outside of the scope of UK taxation, which can be advantageous if you have significant foreign income or assets. The remittance basis is only available for the first 15 years of living in the UK, but during this time it provides the potential to secure wealth and avoid tax erosion. After this period, you will automatically be ‘deemed’ to be domiciled in the UK and will have to pay tax on your worldwide income.
Choosing the remittance basis of taxation has wide implications, specifically for your investment strategies and foreign income management. In particular, separation of onshore and offshore bank accounts and investments plays a pivotal role in ensuring you are able to benefit from this planning opportunity. If your relocation will involve borrowing to buy a new home, or for other purposes, special regard must also be given to where the loan is granted from and how and where it’s serviced, in order to avoid any remittance issues. This is where a private bank with access to both onshore and tax neutral, offshore, capabilities can be very helpful.
At Nedbank Private Wealth, we can work with you and your tax advisers to help structure your banking, investment and borrowing requirements in the most effective way when relocating to the UK. In addition to this, we can assess your current circumstances and put a plan in place to help you achieve your goals and objectives. We use specialist software to model and help you visualise your financial future, exploring different scenarios and options, all to ensure you remain on track with your plan.
Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how wealth planning can help them achieve their financial goals and objectives, or call +44 (0)1624 645000 to speak to our Client Services team. At Nedbank Private Wealth, multi-generational relationships are really important to us. So we work with you and your family to offer the appropriate support at whatever stage you and your family are in life.
Any examples of investments and structures used are for illustrative purposes only. The inclusion does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.
Senior Wealth Planner , Isle of Man
Yash joined the wealth planning division in 2022 and has over 16 years’ experience in wealth management. He works closely with clients and their families, together with their professional advisers, to assist them in structuring their wealth in the most efficient manner to achieve their goals and aspirations. Yash has been with the Nedbank Group since 2010 and was previously head of international for South Africa’s central region. Since his move to Nedbank Private Wealth in the Isle of Man, he also assists South African individuals and families who wish to invest or relocate internationally.
Yash is a member of the Financial Planning Institute of Southern Africa and a Certified Financial Planner and holds an MBA.
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