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Expat guide to investing in the UK part 1 – investment opportunities

Expat guide to investing in the UK part 1 – that will be the topic of today’s article.

Nothing written here should be considered as financial advice, nor a solicitation to invest. 

For any questions, or if you are looking to invest as an expat, you can contact me using this form, or via the WhatsApp function below


Just as in any country, the investment options available for expats in the UK are limited compared to those available for the residents.

In this article, we will discuss all the possible options available for expats to invest in the UK. The investment opportunities available for expats can be in the country or abroad (offshore).

However, most of the expats who are living in the UK usually opt for offshore investments mainly because of the tax benefits they get.

Nevertheless, some types of investments based in the UK may or not be readily available for the people living outside of the UK (like ISAs).

The process of understanding each and every type of investment might be a tough process for most people, and in such cases, people get confused and experience losses on their investments.

Therefore, we highly suggest you contact a financial advisor/investment manager before you start pouring your hard-earned money into investments.

In most cases, expats prefer to invest in a wide range of investments, which is known as their Investment Portfolio, and such a portfolio is managed by an expert financial adviser or wealth manager.

As usual, this article must not be considered as actual investment advice, and you still need to follow the instructions of a financial expert who is aware of your financial situation and investment goals.

If you have a diversified portfolio and are no longer having the time to take care of your investments, then you can opt for the services related to wealth management and financial planning offered by us.

So, let us now have a look at the types of investments available for expats in the UK, and after that, we will look at some key points that should be taken into careful consideration by expats.


Expat guide to investing in the UK
Expat guide to investing in the UK part 1 - investment opportunities 5

The first type of investment available for expats in the UK is an ISA (Individual Savings Account), but you should know that you can only put your money into an ISA when are considered as a resident in the UK.

Not only that, but even the actual citizens of the UK, who have lost their resident status and are living abroad are also not allowed to have an ISA.

In such circumstances, not only would you be allowed to open a new ISA, but you will be restricted from contributing to an existing ISA.

An individual can open an ISA even before they are about to leave the UK, but it will be depending on the new country of residence.

As one of the main reasons for people to put their money into an ISA is because of the tax benefits offered by an ISA, you should always make sure that the new country of residence would also offer the same kind of benefits.

There are 4 types of ISAs available in the UK namely Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs.

Some age restrictions are applicable depending on the type of ISA you choose, and you will be allowed to put your money into one of each type above per tax year.

As mentioned earlier, you must be a resident in the UK for opening an ISA, and in case you are not a resident, then you must either be a Crown servant or their spouse/civil partner.

A crown servant is a person who has been sent abroad for carrying out an overseas civil service or a diplomatic service.

You will not be allowed to open an ISA on behalf of somebody else unless they are children of age under 18 (Junior ISA) or someone who is not capable of opening an ISA on their own (lacking mental capability).

There will be no taxes on the interest gained from the cash assets in an ISA or the income/capital gains obtained from the investments in an ISA.

This means, when you are filing taxes, you will not be required to declare an interest, income, or capital gains generated from an ISA.

As said before, you can put your money into only one kind of an ISA per year, and the tax year in the UK starts on 6th April and ends on 5th April.

With the help of ISAs, you can save £20,000 per year where you either put all the money into one kind or split it across some or all the types.

Coming to a Lifetime ISA, you will only be allowed to put in £4,000 per tax year, which means the max limit you can put into a lifetime ISA is £4,000.

The money or assets put into your ISA will be tax-free as long as you keep it in your account, and there are a wide range of assets that can be kept in ISAs, which are as follows:

  • Cash ISA:
  • Bank Savings
  • Building society accounts
  • National Savings and Investments products
Expat guide to investing in the UK
Expat guide to investing in the UK part 1 - investment opportunities 6
  • Stocks and shares ISAs:
  • Shares of companies
  • Unit Trusts
  • Investment Funds
  • Corporate Bonds
  • Government Bonds
  • Lifetime ISAs
  • Everything that can be kept in Cash ISAs and Stocks and shares ISAs
  • Innovative Finance ISAs:
  • Peer-to-peer loans, which are loans offered by you to people or companies without the necessity of a bank.
  • Crowdfunding Debentures, which means investing in a business through putting money into its debt.

Regarding the stocks and shares ISAs, you will only be able to transfer non-ISA shares if they are transferred from the employee share scheme, if not, you will not be able to transfer non-ISA shares.

Peer-to-peer loans cannot be transferred if they are already made, and crowdfunding debentures cannot be transferred if they are already held in an innovative finance ISA.

As an expat having resident status in the UK, you can obtain ISAs from the following:

  • Banks
  • Credit Unions
  • Stockbrokers
  • Peer-to-peer lending services
  • Building societies
  • Crowdfunding companies
  • Financial Institutions

When it comes to withdrawals, you will be allowed to withdraw money from your ISA whenever you want without losing the tax advantages.

However, you must get familiar with all the terms of your respective ISA to know whether there are any sort of charges or fees on withdrawals.

Nonetheless, the rules for withdrawing money from a Lifetime ISA differ compared to the other ISAs.

Some ISAs are flexible, which means that you can withdraw money from your ISA and put it back in the same year, and there will be no reduction in your current year’s allowance for doing so.

The details regarding the flexibility of your ISA can be found out from the provider from whom you are opening your ISA.

The ISA can be transferred from one provider to another whenever you want, and additionally, you can transfer your ISA to the same type of ISA or a different type of ISA.

When you intend to transfer the money invested in an ISA for the present tax year, then you are obliged to transfer all the money.

Anyhow, you can either transfer a part of your invested money or all the money if you are transferring the money invested in the pat (starting from the previous year).

One important thing that needs to be taken into consideration is that when you are transferring cash assets from a Lifetime ISA to a different type of ISA, then there will be a withdrawal fee of 25%, and this is only applicable if you are transferring it before the age of 60 years.

Cash assets from your innovative finance ISA can be transferred to another provider, but you cannot transfer any other types of investments.

You must also get to know about the terms regarding transfers within ISAs because some providers might charge additional fees for this.

When you wish to switch providers, you can contact your desired ISA provider and fill out an ISA transfer form with them, and when you do not opt for this process, you will not be able to reinvest that money without losing the allocated tax-free allowance.

The process of ISA transfers usually takes around 15 working days, when you are transferring between cash ISAs, and 30 days for the other types of ISA transfers.

Regarding the innovative finance ISA, you should contact your provider and ask them the timeframe required for the transfer to take place.

In any circumstance, if you are facing any issues with your provider regarding your ISA transfer, then you can complain about the issue to the Financial Ombudsman Service at the following numbers:

Landlines: 08000234567

Mobiles: 03001239123

8 AM to 8 PM on weekdays and 9 AM to 1 PM on Saturday.

When you move abroad after opening an ISA in the UK, you will be restricted to put money into it from the following tax year after moving, but crown servants and their spouses are allowed to do so.

The details regarding your moving abroad should be informed to your provider as soon as you cease to be a resident in the UK.

Even after moving abroad, the ISA account can be kept open, and the tax benefits can be availed on the money invested or assets held in your ISAs.

The process of transferring your ISAs can be done even if you are not a resident in the UK, and you can start putting your money back into your ISA if you return to the UK and gain the UK resident status again.

When you die, your ISA will end if the executor closes your ISA or if the administration of your estate has been done.

Other than any of these two circumstances, your ISA provider will close your ISA after a period of three years and one day following your death.

Until then, there will not be any Income Tax or Capital Gains Tax, yet all your investments held in an ISA shall become a part of your estate for Inheritance Tax reasons.

Concerning the Stocks and shares ISA, your ISA provider can sell the investments and pay the resulting money to the manager/beneficiary of your estate.

Otherwise, they can transfer your investments to your spouse or civil partner’s ISA, and this can be done only when they have an ISA with the same provider as you.

Once the individual dies, the ISA can be inherited by the spouse or civil partner, and they will get an added tax-free allowance along with their usual allowance.

The tax-free amount can either be up to the value of the dead individual’s ISA during the time of their death or the value of the ISA when it is closed.

The ISA provider might either pay the proceeds from selling the investments of a deceased individual’s ISA to their manager/beneficiary of their estate or else, the investments can be transferred directly to the spouse or civil partner, only when the individual died between 3rd December 2018 to 5th April 2018.

Offshore Investment:

Expat guide to investing in the UK
Expat guide to investing in the UK part 1 - investment opportunities 7

Often, most expats take the help of high street banks in order to improve their savings.

This might seem to be a good idea, yet with all the record low-interest rates, the buying power of such savings will account for a loss when there would be an increase in inflation along with the surge in the cost of living.

When you consider the recent inflation in the UK, which is around 5%, savings will account for nothing, if not leaving the investor at a loss.

Usually, investors who are residents in the UK can put their money into investment bonds, but what about the expats and non-residents.

This is when offshore investment bonds come into action and some offshore bonds such as those available in the Isle of Man or Guernsey are easily accessible by such individuals.

In simple terms, these bonds are nothing but life insurance that consists of various types of investment funds, and these are considered to be an ideal investment for expats concerning investment funds.

As we are talking about expats, investing in offshore bonds happens to be one of the efficient ways as there will not be any capital gains tax or income tax.

As the investment is free from taxes, the investments will go nowhere but upwards and offer efficient returns for expat investors.

You have to remember that, under certain circumstances, offshore bonds will be subject to withholding tax and cannot be reclaimed for tax purposes.

The terms and conditions regarding the avoidance of income tax and the income obtained from the bond will depend on the investor’s country of residence.

When invested in offshore bonds, the expats can expect capital instead of an income from them because only 5% of the income obtained from an investment can be withdrawn every year.

Under the circumstances discussed above, the profits obtained from these investments would be considered as income and taxed under such conditions in the individual’s country of residence, and if so, the taxes would amount to up to 5% of the investment.

These taxes apply to expat investors when they are making a withdrawal. There might even be commissions when you are involved with offshore investment bonds, and if not considered carefully, they can sum up to a considerable amount.

Pensions, QROPS, and other similar plans:

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Expat guide to investing in the UK part 1 - investment opportunities 8

One of the most important types of investment made by a person is for securing their retirement, and while doing so as an expat in the UK, pension plans and QROPS tend to be beneficial for expats.

In the UK, a pension scheme is considered to be an effective savings plan aimed at the retirement of an individual, which comes with tax benefits.

The pension scheme of an individual can either be managed by expats themselves or it can be managed by an employer on behalf of the individual.

For expats who have a significant amount of money in pensions, the QROPS comes with an additional option, with the help of which, they can transfer a UK pension out of the country while having the benefits.

Recently, QROPS and their benefits are not so advantageous as they used to be in the past, and yet, these can be advantageous for expats.

Mainly because of the unacceptable investment advice from inappropriate investment planners, QROPS seemed to have taken a negative turn, yet one should never underestimate the benefits obtained from QROPS.

Structured Note:

Some of you might not have heard about structured notes until now, and for such people, a structured note is a debt security that is issued by financial institutions.

The returns from structured notes are dependent on equity indexes, single equity, a basket of equities, commodities, interest rates, or foreign currencies.

This means the overall returns and the performance of a structured note is in relation to the returns and performance of an underlying index, asset, or group of assets.

The term for a structured note is usually a fixed term, which ranges from 4 to 6 years, and these products may not be available with mainstream financial institutions.

As an expat, you can get access to structured notes from investment banks. The returns offered through structured notes are usually around 100%, and these returns will be paid to the investors after the completion of the fixed term.

The returns paid by structured notes are based on the conditions mentioned by the provider during the start of the fixed term, and these conditions shall be in accordance with the lowest-performing derivative.

During the term of a structured note, reviews shall be done on a regular basis, and during these reviews, the performance of underlying derivatives is evaluated.

If the lowest-performing derivative in a structured note is outperforming a particular limit (such as 5% more than the actual value), then it will be paid out.

After completion of the fixed term, when the lowest-performing derivative is exceeding a conditional marker (such as 80% more than the actual value), then investors will receive the entire amount of their investment.

Because of the requirement for advanced level knowledge, structured notes are only made available for high-net-worth investors or advanced level investors.

Some financial advisers also offer structured notes to their clients while they explain all the information to investors such as risks and benefits.

In general, it is ideal for a person to invest in structured notes for an amount that is equal to 10% of their investment portfolio.

International Banks and Offshore Banks:

Many international banks are offering services related to wealth management, which are specifically tailored for expats. These services differ on the basis of capital available with expat investors.

While opting for an international bank, most investors assume that the wealth managers and financial advisers are independent. To choose an independent. For selecting an independent adviser, you must select by searching the entire market.

In many situations, wealth managers and financial advisers will not have access to the products offered by a bank, and if so, you might actually miss out on the investment options that are apt for you.

On the other hand, offshore banks allow an individual to manage their finances easily while offering some tax advantages.

Offshore bank accounts are available in various types of base currencies, and these banks have a minimum balance requirement that is more than the normal banks.

Some of the best offshore bank accounts are offered by banks such as Santander, Royal Bank of Canada, Barclays, HSBC, Lloyds, etc., whereas some of the best private banks include HSBC, Standard Chartered, St. James’s Place, Barclays, etc.

Ethical Investments:

Ethical Investment is the process of investing in companies that are against the negative impact on society and the environment.

Investing ethically offers some satisfaction to investors as they know they are not investing in something that is against the moral reasons they support or something that is against the environment or society.

To know more details about ethical investments in detail, then read the article available on our website by clicking here.

Bottom Line:

As it was not possible for us to include all the investment options available for the expats living in the UK, we also created another part where we covered the remaining investment opportunities.

Please make sure that you follow up with that article as well because the following article will contain the details of investments available and some investment tips for expat investors in the UK.

Pained by financial indecision? Want to invest with Adam?

Adam is an internationally recognised author on financial matters, with over 354.2 million answers views on Quora.com and a widely sold book on Amazon

This website is not designed for American resident readers, or for people from any country where buying investments or distributing such information is illegal. This website is not a solicitation to invest, nor tax, legal, financial or investment advice. We only deal with investors who are expats or high-net-worth/self-certified  individuals, on a non-solicitation basis. Not for the retail market.



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