Don’t worry about moving your money offshore

Many expats make the mistake of believing their income and assets are safe from the long arm of the UK taxman once they move abroad – but this is not necessarily true.

Leaving the UK without following the right procedure can mean huge tax penalties and surcharges.

For instance, transferring a UK pension fund in to a QROPS is a major financial attraction for many expats, but these funds are only open to non-residents.

Switching cash to a QROPS offshore pension only to find you are not considered non-resident by the taxman means you could face massive tax bills that can easily swallow more than half of your pension fund.

Under the circumstances, taking some professional advice from lawyers and tax experts about your resident status seems more than worthwhile.

Some points to bear in mind when leaving the UK for abroad are:

  • Do not keep a bolthole back in the UK. If you have a home here, the taxman will try to say you never really left and all your income and gains are subject to UK tax.
  • Do complete the HMRC exit forms declaring your date of departure
  • Don’t think just because you spend less than 90 days a year in the UK that you are a non-resident
  • Do not rely on double taxation agreements to say you are non-resident
  • Do let the country where you set up home know about your intentions to stay long term

Taking advice before you go is always wise – trying to sort out international financial affairs when coping with a new life abroad is a headache.

Talk to your professional advisers at least six months before you intend to leave the UK.

That will give time to sort out your finances – including any QROPS pension transfers – before you go.

Remember that moving money offshore to a bank, investments or QROPS pension is not a problem – the issues follow when failing to report any earnings or benefits to the right tax man in the right country.

Find out more by reading the iExpats QROPS Guide free from their website