Your Financial Planning Checklist For Leaving The UK
This article is intended for British citizens exploring a move abroad, and identifies the key financial areas to consider to ensure peace of mind in your country of choice,
Starting a new life in another country is an exciting opportunity to explore new cultures, broaden your horizons, and embrace fresh adventures. Whether you’re moving solo for a new job, relocating with your family, or preparing for a retirement in the sun, taking time to plan your finances can make a big difference.
With the right foresight and a little organisation and planning, you can avoid unnecessary stress and ensure a smooth transition to your new life abroad. Our guide to financial planning for UK expats is designed to equip you with the confidence to make the move with financial security.
Create A Relocation Budget
One of the most important steps to take before you move abroad is to get clear on your budget. Begin by researching the cost of living in your new country, including everyday essentials such as groceries, rent, transport, utilities, and general lifestyle expenses, which may differ significantly from what you're used to in the UK.
Don’t forget to factor in one-off or less obvious expenses too, such as visa fees, flights, housing deposits, shipping costs for your belongings, medical or health insurance, and school fees if you're relocating with children.
Creating a detailed relocation budget will help you feel more prepared and reduce the pressure during the moving process. Tools like Microsoft Excel or budgets such as YNAB can be useful.
Consider setting up an emergency fund before you move, as unexpected costs can crop up at any time and having a financial safety net in place will give you greater peace of mind as you settle into your new home.
Manage Your Bank Accounts and Currency Risk
Another key consideration is how you’ll manage your money across different currencies. Opening a local bank account in your new country can be useful for making everyday payments or receiving a salary, but it’s not always straightforward. Some banks may require proof of a local address, which can be tricky to provide right away.
A more flexible and often simpler alternative is to open a multi-currency account, which many digital and international banks now offer. These accounts allow you to hold, receive, and convert money in multiple currencies within a single platform, giving you easy access to funds both in your new home and back in the UK. This is particularly useful if you still have financial ties to the UK, such as rental income, pension payments, or investments.
With a multi-currency account, you can choose when to convert money, allowing you to take advantage of favourable exchange rates and reduce your exposure to currency risk. For expats, exchange rate fluctuations can significantly impact spending power and gradually erode wealth over time. By managing your finances with a multi-currency or international account, you can navigate cross-border transfers more smoothly and protect your finances against unpredictable currency shifts.
Your International Tax Obligations
When you move abroad, ensure that you understand your new tax obligations as early as possible. This includes the types of taxes you’ll be liable for, how much you’ll need to pay, and what your tax reporting obligations are. It’s often worth speaking to a locally regulated tax adviser to ensure full compliance and avoid any unexpected fines or penalties.
As a UK expat, your tax residency status may change, so it’s crucial to determine where you are considered a tax resident. HMRC’s Statutory Residence Test is a useful tool to help you establish your UK tax residency status.
You should also check whether the UK has a Double Taxation Agreement (DTA) with your new home country. These agreements are designed to prevent you from being taxed twice on the same income. If no DTA exists, you may still be able to claim a foreign tax credit to reduce your UK tax liability for taxes paid abroad.
Additionally, it's important to notify HMRC when you leave the UK by submitting a P85 form. This form not only informs HMRC of your departure, but it may also help you claim a refund on any UK income tax you’re no longer required to pay.
Pension Planning For UK Expats
As a UK expat, one of the key financial decisions you’ll need to make is what to do with your UK pension. While leaving your pension in the UK might seem like the simplest option, it’s not always the most efficient, especially from a tax or accessibility perspective.
Many UK pension providers impose restrictions on non-residents, which can limit your ability to access your funds, make investment changes, or manage your pension account. In some cases, providers may not allow payments to international bank accounts, and some expats struggle to maintain UK bank accounts.
Thankfully, there are alternative solutions designed specifically for expats. One popular option is the International SIPP (Self-Invested Personal Pension), a UK-based pension scheme tailored for expats. It offers greater portability, investment flexibility, and control over your pension. To learn more, see our dedicated guide here.
Managing Your Investments As An Expat
Managing your investments as an expat shouldn’t be a source of stress- in fact, moving abroad can open the door to a broader range of international investment options, some of which may offer greater growth potential and income than what’s typically available in the UK.
From offshore investment vehicles to real estate, to locally compliant bonds and life assurance policies tailored to expats, there are many investment opportunities to explore whilst living overseas. Many of these options are also designed to be tax-efficient, helping you make the most of your money.
However, it’s important to understand how your expat status affects any existing investments you may have. For instance, UK ISAs lose their tax-free status once you're no longer a UK resident.
To ensure your investments are working for you, and that you remain compliant with local tax laws, it’s wise to seek advice from a locally regulated financial adviser.
Estate Planning Outside Of The UK
Estate planning is an important aspect of financial life, but it is even more crucial for expats. When you move abroad, you may find that inheritance and succession laws in your new country differ significantly from those in the UK, and in some cases, they can even contradict them.
It is essential to have a valid will in place before you move and to familiarise yourself with the local laws regarding estate distribution. Some countries have ‘forced heirship’ laws, which dictate how your estate must be divided, regardless of what your will may state. This could mean your assets are distributed in a way that doesn’t align with your wishes unless you’ve taken steps to protect your heirs.
Fortunately, there are tools available to mitigate this, for example, under the EU’s Brussels IV regulation, UK expats living in certain European countries may be able to elect for UK inheritance law to apply to their estate, helping them avoid forced heirship rules.
Working with a cross-border financial adviser can help to navigate these complexities. They can help ensure your will is legally valid and compliant in both the UK and your country of residence, giving you peace of mind that your wishes will be respected and your loved ones protected.
The Importance Of Specialist Financial Advice For Expats
Managing your finances as an expat can be complex, especially if you have assets, bank accounts, or income spread across multiple countries. Whilst seeking professional guidance is often invaluable, it’s crucial to ensure you’re working with a financial adviser who truly understands the unique challenges expats face. That means choosing someone who specialises in cross-border financial planning and is fully regulated to provide advice in the country you are resident in.
At The Wealth Genesis, all of our advisers are experts in expat finance and are authorised to give advice to clients around the world. We are completely independent, which means we’re not tied to any specific products, platforms, or financial institutions. This allows us to offer honest, unbiased advice based on the entire market.
