6 minute read
Embracing life as an expat
It’s clear that the financial challenges of moving to a new country can be unsettling Recent research on those who are planning or have recently moved abroad notes the impact that complex financial admin can have on the early days of a move Around half of those that took part in the research identified that juggling finances between two locations was a particular concern, with taxes a significant consideration for three in five of those responding (source: Ipsos).
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Becoming an expat can offer enormous opportunities with a range of benefits; a better lifestyle and career prospects along with the chance to travel and experience a different culture. Ensuring your finances are well managed, and your tax obligations are met, means you can take advantage of your new expat status without unnecessary financial pressures.
So, what are the top financial issues which British expats in Hong Kong need to think about?
Local tax
One of the first changes to take account of are how the local tax laws and system may be different So, if you’re relocating to Hong Kong from the UK, a key change to adapt to will be in how you pay your tax Rather than as part of your salary, in Hong Kong any tax on your earnings is generally payable in one lump sum on an annual basis.
Just as in most tax systems, there are some tax planning opportunities available in Hong Kong. Two of the most relevant are likely to be the rental reimbursement scheme and voluntary contributions to Hong Kong pension schemes. These can certainly help you maximise your wealth.
Will you become non-UK tax resident?
If you are able to break UK tax residency, it will limit your UK tax liabilities It is important to understand your limits for visiting the UK in order to maintain a non-UK tax residence status, and also your ongoing reporting requirements with HM Revenue It may be necessary to be non-UK resident for more than five years to escape UK Capital Gains Tax on the sale of assets – apart from UK land and property, which will always be within the charge to UK tax no matter how long you have been an expat.
Cost of living
The costs of living and the types of expenses you will incur while living in Hong Kong are very likely to be different from the UK. Make sure you have understood what your monthly outgoings will be and ensure you have adequate medical insurance to meet your family’s needs.
UK property
Many British expats choose to keep a foothold in the UK by holding on to the family home, renting it out or buying a UK investment property whilst living overseas Special rules apply if you’re a non-UK resident landlord or live abroad usually for more than six months, and receive rental income. If you live overseas and let a property using an agent, they must follow the scheme and deduct basic rate tax from your rental income before they pass it on to you, unless they’ve permission from HMRC not to. You can offset this against your own tax bill at the end of the year by submitting a Self-Assessment Tax Return.
If you’re selling a UK property, you may face Capital Gains Tax. The rules around taxation of UK property can be complicated so it's important to understand how they apply to you before making any decisions.
Pensions and retirement savings
It’s important to ensure you have a robust pension or retirement savings plan in place When it comes to expat pensions you may have more options available, and which you could make the most of whilst you’re overseas Some UK schemes can be put on ice, especially if they offer benefits which it would be sensible to keep hold of.
If you’ve recently left the UK and have an existing defined contribution personal pension from when you were resident, you may be able to continue to contribute to it in the tax year in which you leave the UK, and for up to five tax years after. These contributions could be £3,600 gross each year, and in certain circumstances, if you have taxable employment income in the UK, you may be able to contribute higher amounts.
Estate matters
One of the most common points which is overlooked after a move overseas relates to your Estate plans If you have a family, it’s important to check whether your existing Will covers the appointment of guardians to help navigate local laws in Hong Kong Having this in place means, if the worst should happen, your family will be taken care of in line with your wishes.
With adjustments to your financial plans taken care of, you can enjoy spending time exploring all that Hong Kong has to offer – various hiking trails, a new and interesting culture, the islands and beaches or travelling the region. These pursuits might be some of the reasons why you chose to relocate to Hong Kong in the first place! So, getting your finances in order will afford you the freedom to embrace these exciting parts of expat life.
With eight offices around the world, including Hong Kong, many of our team have experienced a move overseas themselves and enjoyed time abroad as expats Together with their knowledge and expertise covering a wide range of tax and financial matters, they can offer practical and informative advice during your time in Asia.
About The Fry Group
The Fry Group are tax, estate and financial planning experts Established in 1898 with offices throughout the UK, and in Belgium, Hong Kong, Dubai and Singapore, they specialise in helping British people throughout the world in all aspects of their financial planning and have been proud sponsors of The British Club for more than 10 years
www.thefrygroup.hk
E: info@thefrygroup.hk
T: +852 2526 9488
Matthew Curtis Chartered Financial Planner
This article has been produced with the aim to provide information. However, this is not intended to form professional advice nor should it be relied upon as such and before taking any particular action, specic and personal advice should be obtained. All levels and basis of, and relief from taxation illustrated here are subject to change. The Fry Group (H.K.) Limited is licensed to conduct investment advisory and asset management in Hong Kong by the Securities & Futures Commission (SFC; CE Number: ATY965) and is licensed as an insurance broker by the Insurance Authority (IA; Licence Number: FB1207)
