If you are exiting the Gulf you may consider a move to the EU rather than return to the UK. But how does the latest phase of Brexit affect these plans?
The UK government has confirmed that it will not request any extension to the Brexit transition period. 31 December remains the deadline date for the two parties to reach new trade agreements - and effectively for British expats – and would-be expats - to review their situation and strategic financial planning. What do you need to do to secure your position?
Although the UK formally left the EU on 31 January, the transition period means that little has changed for citizens and businesses so far. It was meant to provide 11 months for the two parties to negotiate the new trade deals that will determine their future relationship. Even under usual circumstances, many spectators argued that this was insufficient time given the scale of negotiations – and we now know that these are far from usual conditions.
When the coronavirus pandemic escalated, local health issues were naturally given priority. The UK had until 30 June to request an extension to the transition period, which the EU was open to, but on 12 June UK Cabinet Office Minister Michael Gove confirmed that they had informed the EU that they would not do so, adding “the moment for extension has now passed”.
The clock is fast ticking down to the end of the transition period, where a no-deal Brexit remains a possibility, so now is the time to review your situation and strategic financial planning and take action where necessary.
Residence If you are not yet officially resident in your chosen country, you need to take all the necessary steps before the end of the year. UK nationals who are lawfully settled in an EU state before the transition deadline can lock in a lifetime of citizens’ rights under the UK/EU Withdrawal Agreement. These benefits are protected for as long you are resident in that country.
There are currently no protections for UK nationals arriving after 2020.
Tax planning When taking up residence in a new country you will become liable for tax there, so you need to prepare for this too. When it comes to the taxes you pay in your country of residence, there is no reason for anything to change post-Brexit as double tax treaties are independent of the EU. However, if a country already taxes non-EU assets or residents differently to EU ones, then you could be affected in future.
Pensions If you are considering transferring your UK pension into a Qualifying Recognised Overseas Pension Scheme (QROPS), if you don’t start soon you run the risk of paying a 25% tax.
Currently you can transfer to EU/EEA-based QROPS tax-free, but this could change after the Brexit transition ends. The UK has already brought in a 25% ‘overseas transfer charge’ for other transfers and has the means to easily extend this to EU/EEA transfers once it sheds its EU obligations.
The first step, though, is to take professional, regulated pensions advice to confirm if a QROPS would be the best move for you, or if another option would be more beneficial for your circumstances.
Investments It is also sensible to review your investment portfolio to ensure it is suitable for your life as an expatriate, and that you have suitable diversification in place and are not overweight in UK assets. You should also consider what is the best currency mix for you as a UK national living in Europe.
Jason Porter is a Director of specialist expat financial advisers Blevins Franks, which has been rated Best Overall Adviser Firm in the ‘International Adviser’ magazine best practice awards. Jason is the co-author of the book ‘Retiring to Europe’.