Retirement:
What happens if I want to retire abroad?

If you are planning to retire abroad you should seek professional advice as early as possible. It may be possible to place some or all of your investments and / or pensions in your chosen country to make your eventual retirement more tax effective.

For information about the issues to consider when buying property overseas click here.

You may also need to consider the following:

Your bank account

You will almost certainly need to open a local bank account. If your bank has overseas branches they may be able to help or recommend an alternative.

Your pensions

You can generally continue to receive your state pension if you move abroad. If you retire to an EU country your UK state pension will continue to grow in line with any increases made in the UK but if you retire to most non-EU countries this will not happen.

You will need to make arrangements with the trustees of your other pension schemes to have your pensions paid to you abroad. Some may make an annual charge for this and exchange rate differences may reduce the real value of the pension you receive.

Your investments

Any income you receive from UK investments is generally subject to UK tax but you may be able to gain exemption or partial relief from UK tax if your new homeland has a double taxation agreement with the UK. You may however wish to change to offshore investments or investments in your new homeland. You may need an accountant and/or a financial adviser in your chosen homeland if you have substantial investment interests. Many UK accountants have overseas offices or connections.

Your tax status

Whether you are subject to UK income tax and capital gains tax will depend on matters such as where your assets held, where your income arises and how long you are out of the UK. If you return regularly for lengthy periods of time you may find you are still subject to UK tax. You may even find you are subject to tax in both your new homeland and the UK although there are often reliefs and exemptions available if there is a double taxation agreement in place between the UK and your new country of residence. You will need professional advice to ensure you do not get any large, unexpected tax bills.

Your life assurance

Any life assurance cover you hold in the UK will generally remain valid provided you continue to pay the premiums and your new homeland is not specifically excluded from cover. You should however check with your insurer.

Your UK property

If you have left your UK property empty your insurance cover may be reduced or even lost as an empty property poses a much greater insurance risk. You must advise your insurer that you no longer live in the property.

You may decide yo let out the property in which case you may need a letting agent to handle matters for you. The rental income will be taxable in the UK.

Your healthcare

Most EU countries operate a healthcare system similar to the NHS and you will be able to benefit from these services. Standards of care and what is actually covered vary widely from country to country. It therefore makes sense to consider private medical insurance if you do not already have it, or to see if you can extend or transfer an existing policy.

Your domicile

Your domicile of origin is basically the country you were born in, if you move abroad permanently and sever all ties with the UK, making it clear you do not intend to return you may be able to lose your UK domicile.

This can be important as while you have a UK domicile you are subject to UK inheritance tax on your worldwide assets. Taking professional advice in this respect is essential.