Anyone considering retiring overseas can look forward to a warmer climate, a slower pace of life and the opportunity to experience life in a new country with a different culture.  Finances dictate many moves overseas and planning ahead – perhaps 18 months before moving – is beneficial in order to financially and mentally prepare for such a significant change of life. Here are a few things to consider:

Your home
Do decide whether to keep or sell your UK property. Selling may free up capital, but renting could provide an income and the option of returning to the UK in the future.  If you choose to rent you can enter the Non-Resident Landlord Scheme, to ensure any rent is not subject to UK tax.

Tax
Ensure you claim all of the Income Tax refunds you are entitled to. An expert tax adviser can assess your position for the full tax year of your departure to enable you to claim all of the UK allowances you are entitled to, meaning tax worries can be avoided.

Where to move to
When considering retirement destinations there are many factors to take into account.  Climate, the cost of living, visas/residency permits, health care, infrastructure, political stability, language, housing, food, the availability of western goods and many other concerns may all factor in the decision making process. Do also consider that areas within a country may differ vastly – if someone were to retire to the UK from overseas, there are big differences in lifestyle and cost of living between an inner city and the south coast. So your choice is not only the country, but where in the country.

Clearly tax has some relevance. Some areas are well known as retirement havens due to unique tax situations. One of the most attractive places to retire is Cyprus because the maximum Income Tax is 30 percent, pensions are only taxed at five percent, Capital Gains Tax is 20 percent and there is no Inheritance Tax.

For British expatriates the European tax havens remain popular. Both Andorra and Monaco offer zero personal Income Tax on pensions or savings income. France, Spain, Italy and Malta are also attractive as they are not too far from the UK and offer an excellent climate. Outside of the Euro zone South America, Australia, New Zealand, Malaysia and Thailand are also popular.

What about pensions?
Most people retiring abroad will be expecting some sort of personal or company pension. If that is the case, check whether or not the UK has a ‘Double Taxation Treaty’ with the country you are moving to. If there is no treaty in existence then Income Tax will be taken on your UK pension at UK rates, despite the fact you are living elsewhere in the world.

Through the relatively new qualifying recognised overseas pension scheme (QROPS) arrangement it is also possible to transfer a pension fund to another country, but you need to be careful that you will not be losing out on a valuable benefit that was tied to your UK arrangement. As far as entitlement to State Pension is concerned, there will usually be no problems if you are in the Euro zone but in certain countries (such as Australia and Canada) you will no longer be entitled to indexation increases, making your State Pension fully exposed to the ravages of inflation over time.

If you have just retired and are yet to decide on a specific location, you could become ‘fiscally nomadic’ enabling you to travel before putting down firm roots. You will have to ensure that you do not spend enough days in any one country to be liable to pay tax to that state.

When planning an overseas retirement do seek advice from a firm well-versed in international financial planning. They can help develop a plan for your situation, and you can rest easy in the knowledge that you are financially prepared for your retirement, and enjoy all the benefits that your new overseas location provides.

Web: www.thefrygroup.co.uk