80,000 Brits travelling overseas for work at risk
According to Office for National Statistics figures, around 78,000 Britons leave the UK to work overseas annually. However, while most do so in search of higher pay and lower taxes, the financial advice firm believes many end up losing out due to simple administrative errors.
“Tax, inheritance and pension considerations are among the furthest things from people’s minds when they move overseas – but a failure to do so can have dramatic consequences for their future,” said Sam Instone, chief executive of AES International.
“Taking professional financial advice in this situation is highly recommended, but failing that, there are some simple steps people can take before they move which could really make a difference financially.”
AES International believes all aspiring British expatriates should take note of the following before leaving the UK:
- HM Revenue & Customs
Before leaving the UK, you must complete form P85. Despite this, more than half of British people who were preparing to move abroad surveyed by AES International were unaware of the form.
The form is crucial for expats to ensure they will not be chased for tax and so they can claim tax relief or any tax refunds they are owed. Furthermore, if you plan on becoming non-UK resident for tax purposes, you will need to complete this form and cut all ties with the UK.
Sufficiently cutting all ties with UK when moving abroad is important, as HMRC will tax individuals at normal levels in absentia if they are deemed to remain UK citizens. In 2011, Robert Gaines-Cooper lost a long-running battle with HMRC over 25 years’ worth of unpaid taxes. The tycoon left the UK for the Seychelles in 1976, but was judged by tax authorities to have not severed ties with the UK during his years abroad.
Many people let their homes out to tenants when they move abroad, using rental income to cover mortgage payments and other costs.
However, if the home was purchased with a residential mortgage, it is vital to inform the mortgage provider. A failure to do so may be deemed a breach of contract, and is likely to nullify the buildings and contents insurance.
When you leave the UK, you are permitted to continue making contributions to a UK scheme.
However, there are restriction on the amount an individual can contribute. As current rules stand, up to £300 may be contributed to a UK pension per month. This figure is capped at £3,600 per year for five years.
Contributions made over and above this figure (and any made after five years) will not be afforded tax relief, so you may ultimately receive a tax bill from HMRC. In comparison, the current annual allowance in the UK for pension contributions is £40,000.