Financial planning ‘too far down the priority list’ for Brits considering relocation

Financial planning is too far down the priority list for UK adults looking to move abroad for the long term, Hoxton Wealth has warned.

Analysis from law firm Mills & Reeve showed that 47 per cent of adults in the UK had considering moving overseas long term, with 21 per cent saying they were likely to relocate within the next five years.

However, financial planning did not feature prominently among the areas people said they would seek advice on, despite 26 per cent being unsure whether moving abroad could impact inheritance laws and wills, and 23 per cent not knowing if relocation could affect pension access and tax arrangements.

Commenting on the findings, Hoxton Wealth warned that the study indicated a significant gap between people’s ambitions to relocate and their understanding of the financial implications involved.

Hoxton Wealth CEO, Chris Ball, said that while it was understandable that people focused on visas and property first, the financial side of relocating was where the advisory firm saw the costliest mistakes made.

Ball added that anyone considering a long-term move abroad should be looking at several things well in advance, including how their UK pension will be treated in their new country of residence, and whether a transfer such as a QROPS is appropriate; how double taxation treaties apply to their income, investments and any UK property they retain; and whether they will become tax resident in their new country and what that means for capital gains and inheritance tax.

He also urged those considering relocation to consider how their domicile status, which is separate from residency, could affect UK inheritance tax on their worldwide estate; and the practical impact of currency risk if they were drawing a UK pension or income while living with day-to-day costs in another currency.

"None of these issues are insurmountable, but they take time to plan properly,” Ball continued.

“Ideally people should be having these conversations twelve months or more before a move, not after they've already packed up their life in the UK."

Mills & Reeves’ research found that visa and residency rules topped the list of concerns for prospective movers (51 per cent), followed by local laws and regulations (41 per cent), property ownership rules (39 per cent) and tax residency requirements (39 per cent).

Wider financial planning considerations, such as pension transfers, cross-border tax exposure and inheritance tax domicile status, trailed behind these more immediate and practical concerns.

Mills & Reeves said that the findings came as international relocation continued to grow in appeal among UK adults, but they suggested that as more people take the plunge, the financial and legal complexity of moving abroad was not yet matched by public awareness or preparation.

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