Expat Tax Havens Sandra Nattrass at accountancy firm KPMG says: “You need to look at the tax rates in the country you are in as well as the UK. Get yourself an ice pack and a gin and tonic and make some calculations.
“It’s better generally to come back in the middle of the tax year to hit the lowest rates in both countries. Generally you need to have been in each country long enough to equalise the rate bands. “However, if you are in a country with higher income tax than the UK, you can afford to be back in the UK for a longer period of the year without hitting the highest rate bands.” Expat Tax Havens & HSBC Benbow at HSBC agrees that a careful review of your tax affairs is very important. It would usually suggest the closure of offshore bank accounts. “You wouldn’t have to pay tax on income in your savings account while you were overseas, but you will once you are back in the UK,” Benbow says. However, Benbow makes the point that a lot of expatriates stay as expatriates and any return to the UK may be a temporary one. In this instance offshore accounts would probably be kept open.
Nattrass at KPMG agrees: “If you’re going back to the UK and are likely to leave again you may not be resident in the UK, so don’t cut off any avenues,” she says. Expat Tax Havens - Your Investments Your investments will need sorting out before you return to the UK. The change in tax law in 1998 means that gains made outside the UK can be taxable in the UK. The changes in that year’s Budget extended Capital Gains Tax liability to cover expatriates for up to five tax years after their departure. Any disposals during an absence of less than five years will be treated for tax purposes as happening in the tax year in which an expatriate returns. This means that expatriates only have the one tax year’s CGT allowance - currently £7,200 - to claim against any gains. Nor, any longer, can you sell investments and buy them again the next day in order to reduce their base cost for CGT purposes - known as bed and breakfasting. You must either sell them and not buy them again for a minimum of 31 days, or sell them and buy something similar with the proceeds. The major problem, of course, is that often an expatriate will get little or no notice that they have to return to the UK. In this scenario, damage limitation is the answer. Expat Tax Havens & Your Tax Position “It’s as well to sort out your tax position before you leave a country as it may be difficult dealing with them from abroad. Some countries won’t give you an exit visa until you sort out your tax position,” Nattrass says. “If you are likely to be in the position of having to leave at little notice, review your situation every year anyway. If you look at it every December the most you can be adrift is 15 to 18 months. “The other thing is to have contact with an accountant in the country you are leaving so they can help you sort things out when you’ve left.”
Nattrass and Benbow share the view that expert financial advice is essential if you are not to be caught in the tax and currency traps mentioned above. “A lot of employers will pay for you to get advice. If they offer, take it up,” says Nattrass. “Take it before you leave, in the host country and when you come back.” Expat Tax Havens And HSBC Benbow points to the fact that HSBC has financial planning managers in all of its 1,700 UK branches who can set up offshore and local accounts and provide you with tax facts on any of 80 countries and lifestyle guides. Ultimately, your time abroad shouldn’t cost you money. As Benbow says: “You need to make the most of the money you earn whilst you are away in order to have a better life in the future.” 
|
RSS Feed