EACH week, The Scotsman gives you a top ten guide to pertinent financial issues.
The current economic downturn and the rising cost of living in the UK makes the prospect of moving to sunnier climes more appealing for some. But the dream can turn sour, not least because of unforeseen financial implications. Joss Mitchell, director
of HSBC Private Bank Scotland, offers his tips on avoiding the financial pitfalls present in the move overseas.
1 DO YOUR HOMEWORK Make a list of all of the potential challenges that you may face in relocating your family and/or business in a foreign country. The basics alone will include tax implications, preservation of assets at home, pensions, insurance and how to execute banking transactions. The list will be longer than you may imagine.
2 SEEK THE BEST POSSIBLE ADVICEFind an adviser who has the knowledge, ability and resources to pull everything together comprehensively. This means finding an organisation which can provide joined-up thinking from a local presence wherever you choose to relocate around the world. Make sure you deal with an organisation that can operate across borders.
3 GET YOUR NEW DOMESTIC NEEDS IN PLACEWhether you are moving abroad permanently for business or you simply want to invest in a second property, it is vital that you take the time to search properly for your new home and understand the potential pitfalls that you may encounter during the buying process. This can be eased enormously by finding the right adviser with genuinely local knowledge.
4 IDENTIFY NEW OPPORTUNITIESWhether it be for you or your family, everyone must be comfortable that a move abroad will suit their needs outside the home.
If you have children, proper research must be conducted on the educational opportunities and any costs involved. In addition, you think about the career opportunities in the region/country that would appeal to your family.
5 BEFORE YOU GO It is vital to think very carefully about the practicalities of your move. Several organisations need to be informed of your plans, including but not limited to: HM Revenue & Customs; the Department for Work and Pensions; any relevant financial institutions and professional advisers – even utility suppliers and the electoral registration unit.
6 ESTABLISH THE TAX IMPLICATIONSFor both domestic and business arrangements, you must be clear on the tax situation in the country of your choice. In many countries, a state tax is levied annually on the value of your property. There may also be a regional tax and an occupancy tax if you live there for more than eight months of the year. All of these possibilities should be taken into consideration before you commit to a purchase.
7 CONSIDER THE LAWWhen looking for legal advice, bear in mind that, while legal fees can be costly, the advice must be accurate. Solid legal advice is essential but not always easily accessible because of language barriers and misunderstandings.
8 ARE YOU LOOKING TO RETIRE OVERSEAS?You may want to maximise your capital and enjoy a retirement in a warmer climate. Should this be so, you may also want to seek guidance on how to execute effective estate and inheritance tax planning.
9 INHERITANCEIt may not be top of your list, but inheritance laws vary from country to country. It is important to understand where foreign assets sit in your wider portfolio and how these might be passed on should the unthinkable happen.
10 PLAN YOUR EXIT STRATEGYEven for those who carefully consider all of the above, it is still possible that your life abroad is not forever. How do you plan for a return to Britain should your circumstances change or if chasing the dream is no longer practical?
Some expats may have failed to maintain a relationship with banks at home and may have no credit history in the UK.
A bank with cross-border lending solutions may be best placed to assist in the sale of your business or home before you return to the UK.
The full article contains 683 words and appears in The Scotsman newspaper.
