What happens to my UK investments if I move abroad?
Understanding what happens to your UK investments when moving abroad is crucial for effective overseas investment management and maximizing your financial opportunities.
If you want to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).
Introduction
Moving abroad is a big decision, and there are lots of things to think about. One thing that doesn’t usually come up is how your UK investments will be affected if you move away from the UK and make them in another country.
You might be wondering whether it’s worth investing at all in other parts of the world, but this article will explain what happens to investments made outside the UK and how you can protect yourself from risks.
You should be aware that some countries have different tax rules than the UK when it comes to income from overseas assets or property. For example, if you own an apartment in France which generates rental income then this could be subject to French taxation.
If you move abroad and become a resident of the country you’re living in, your UK investments portfolio will be treated as foreign property for tax purposes for that country. This means that any gains and losses on investments made before moving abroad are likely to be taxable in the new location.
It’s also worth remembering that once someone has moved abroad, they must inform their former home country about their new address so they can continue paying into pensions and other entitlements such as benefits payments (such as housing benefit).
You can use the HM Revenue and Customs’ (HMRC) online services to report changes in your address for Income Tax, National Insurance, State Pension, tax credits and Child Benefit. Do note that you cannot use this service for business tax or if you only pay tax through Self Assessment.
Will I have to pay tax on income from UK investments?
As a citizen of the UK, you are obligated to pay income taxes on any income earned from UK-based businesses as well as your foreign income, including any salaries you receive from employers abroad, dividends and savings interest on foreign assets, rental income from properties you own abroad, and pension benefits received from pension funds stored abroad.
The British government generally refers to income earned outside of England, Scotland, Wales, and Northern Ireland as “foreign income.” Any income you get from the Isle of Man or the Channel Islands is likewise considered foreign income under these circumstances.
Depending on your specific situation, this may change, but generally speaking, if you work abroad you are also subject to the tax and employment regulations of the country you are working in.
If you live in a nation that taxes you on your income from the UK, for instance, you will also need to comply, even if you had already paid taxes to the UK government on that income.
You can apply for tax relief in the UK to avoid paying taxes twice if it has a “double-taxation agreement” with the UK.
You will pay tax on any investment income you receive. If you have a UK domicile, meaning that your main home is in the UK, then you are legally considered a UK resident for tax purposes and as such all of your worldwide income is subject to UK taxes.
You also have to pay tax on income from investments made outside of England, Scotland, and Wales (depending on where those funds are held). This could include interest earned from savings accounts or bonds purchased through UK brokerages.
If you no longer have your domicile in the UK, and are considered a foreign resident to the UK for tax purposes, but still have some UK investments (for example, shares), then these should be taxed only by the country you are resident in.
If you are a UK resident, you will have to file a tax return. You can do this online through HMRC or by calling their helpline.
If you’re moving abroad, it’s important to understand your obligations as a UK resident. You still have to pay tax on any income you receive in the UK and overseas, whether that’s from your job or investments.
For example: If you live in France but work for a company based in England, then some of your earnings are subject to UK taxation even if they are generated while working overseas or spent while living abroad.
If you are a non-UK resident and own UK investments, it’s likely that these will be subject to income tax at source (i.e., when they’re transferred into your account). This means that any gains on those investments will be taxable immediately and automatically upon receipt—you won’t have any time in which to manage them before paying taxes on them.
Non-residents do not usually pay UK tax on income from the State Pension or any interest from UK government securities (‘gilts’).
The first thing to check when handling your UK investments when moving abroad is if you will still be regarded as a UK resident for taxation purposes.
Even in the best-case scenarios, tax residency is a complicated topic, so formal tax advice from a tax expert is advised. To put it simply, your tax obligations will be very different depending on whether you are deemed a UK resident or a foreign tax resident.
Also remember that citizenship and tax residency are two very different things. While maintaining your British citizenship, you may be regarded as a foreign tax resident, and vice versa. This distinction is vitally important to digital nomads.
On top of this, some types of investments may also be subject to capital gains tax (CGT). You may have to pay this if you make a profit when you sell or ‘dispose of’ shares or other investments.
Shares and investments you may need to pay tax on include: shares that are not in an ISA or PEP, units in a unit trust, or certain bonds (not including Premium Bonds and Qualifying Corporate Bonds).
The UK government does not take a cut of any shares you give as a gift to your husband, wife, civil partner or a charity. You also do not pay Capital Gains Tax when you dispose of shares you’ve put into an ISA or PEP, shares in employer Share Incentive Plans (SIPs), UK government gilts (including Premium Bonds), Qualifying Corporate Bonds, or employee shareholder shares – depending on when you got them.
Check to see if you will incur a capital gains tax charge on your prior profits before making changes to your current investment portfolio.
The Individual Savings Account, or ISA, could be a desirable and tax-efficient investing program available when moving abroad. UK citizens can invest up to £20,000 annually and get all growth and income free of tax for the rest of their lives.
There are 4 types of ISA: cash ISAs, stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs. You can put money into one of each kind of ISA each tax year.
But take note that if you open an Individual Savings Account (ISA) in the UK then move abroad, you cannot put money into it after the tax year that you move (unless you’re a Crown employee working overseas or their spouse or civil partner).
You won’t be required to pay capital gains tax if you have money in an ISA and withdraw your investment gains while you are still a resident of the UK. Selling them once you have moved abroad could be a different matter, however. Also beware that your current country can also tax you on these gains.
In these situations, it’s best to take care of all of your legal and tax duties before you depart.
Be sure to consult with tax professionals or your financial advisor about all your properties and UK investments before moving abroad.
What happens to my UK investments if I move abroad?
Because of different laws and regulations on taxes and investments in different countries, you most likely will not be able to invest in the same way as you have in the UK.
For example, if you’re planning on moving abroad with your property portfolio and are hoping to pass it on to your children when they inherit it, then you may face difficulties if you’re no longer a British resident.
You’ll also need to consider whether or not there are any restrictions on what types of assets can be transferred between people who live overseas (for instance, some countries may not allow residents from other nations to inherit property).
Investment funds may also not be available in the same form in certain countries.
While you are residing abroad, the majority of UK-based investing platforms will continue to handle your current holdings and UK investments (with some exceptions, due to Brexit). If you move abroad, you can keep most of your existing investments and will still be able to make new ones with certain caveats.
You may face roadblocks when you try to invest new money after you have established a residence abroad. You therefore require either an investing platform in your new place of residency or an offshore platform or an international brokerage in a tax-neutral jurisdiction.
If you move to a country with different tax rules, your investment fund may not be available in the same form. For example, if your UK-based fund is an ISA and there are no ISAs available in France, then it’s unlikely that you’ll be able to open one there.
Investments might not be available in the same form in certain countries. For example, you might find that some investments are only available through the UK investment platform or via an offshore bank account rather than with a local broker or fund manager. If this is the case, then you may need to consider transferring your UK investments into another account before moving overseas.
You should always check if there are any restrictions on your UK investments and shareholder accounts before leaving the country.
Does it matter where in the world I live?
It’s important to note that the tax rules will be different for residents of the country you move to. For example, if you’re a UK resident and decide that your future home is Ireland, then there may be restrictions on how much money can be transferred out of the UK before taxes are deducted.
If you’re moving abroad with your UK investments as part of a retirement plan or other financial strategy, then it’s also worth considering whether or not this has any effect on how they’re managed remotely (either by yourself or with an adviser).
If so, then it’s important that any new tax regime is understood and planned for in advance so as not cause any issues later down the line.
Due to the rise of digital investment platforms, you will likely still be able to manage your UK investments portfolio remotely if you move abroad, no matter where you choose to live. You can still invest in funds, stocks and bonds from anywhere in the world using any device that has internet access (including smartphones).
You will still be able to see how your portfolio is doing at any given time – even if it’s across the world from where you live. If you move abroad, most of your existing investments will still be available to you.
In summary, though moving abroad is a big change, but your UK investments will not necessarily be affected. And it is also worth noting that while there are many factors to consider when making this decision, the tax implications of moving abroad are not as complex or difficult to understand as they may appear at first glance.
The government recognizes that you may have concerns about what might happen if you change where you live, so they offer a number of resources designed specifically for this purpose, from offering online guides with easy-to-follow steps on how to prepare ahead of time before moving; information about who can claim back taxes paid while living abroad; and more.
If you are looking for financial advice on your UK investments, we may also be able to help you. If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
