Reasons to move from an international adviser and avoid a DIY approach to financial repatriation to the UK

We always recommend getting advice with big financial decisions. The same is true for returning to the UK. A UK specialist who understand the nuances of the UK financial system and tax implications is important and something an international adviser may not be familiar. A “Do it yourself” approach is unwise and risky.

A modern day car is a complicated piece of machinery so people do not service a car themselves. Also you would not get a mechanic in a different country to ensure compliance in your new country. A specialist to look after your car is true for your finances too.

Reasons to choose a UK adviser with experience of international clients:

  1. Overseas advisers should not advise UK residents unless they are UK regulated.
  2. Advice on UK and international investments, tax accounts, pensions and QROPS.
  3. Options for restructuring assets for tax efficiency.

Overseas advisers should not advise UK residents unless they are regulated

Typically, an offshore adviser cannot advise on onshore investments or onshore clients. When Brexit completes the UK financial watchdog, the Financial Conduct Authority, will regain regulatory sovereignty and the ability of overseas firms to passport, allowed under the single market in the EU, will end in its current form. The new arrangement for EU advisers to passport into the UK remains unknown but it’s unlikely to be as flexible as the current arrangements. Advisers outside the UK get no recognition or authority to advise UK retail clients unless they are part of a UK regulated firm, meaning the client misses on lots of protections and insurances. An offshore adviser should partner with a UK firm or the clients should transfer to a UK based adviser on planning, landing or having arrived in the UK.

Advice on UK and international investments, tax accounts, pensions and QROPS

Few advisers have the capability to advise on both UK and international accounts and products so this encourages use of Edale – we have experience of UK and international products. You may have opened a range of investments which are specifically available to non-UK residents. These may have tax advantages when not subject to UK tax rules but things can change when back in the UK and you need a local adviser to assist you. You need personal advice to consider what you arrive with and effective plans for going forward.

It can be possible to maintain offshore and non-UK investments when back in the UK. There could be large tax implications of any gains or income you receive. For example, offshore portfolio bonds should be endorsed to avoid receiving deemed gains on life assurance and capital redemption policies. Deemed gain assumes a gain of 15% of the premium and the cumulative gains for each year the policy has been in force. Further, most offshore regular savings plans are ‘foreign policies of life insurance and foreign capital redemption policies’ so taxed at your income tax rate, however, there are ways to reduce the amount payable with reliefs and financial planning. If you have been resident in the UK with one of these policies we can confidentially provide guidance. We have a longer article on Taxation of offshore life policies on return to UK.

Overseas pensions or UK pensions transferred abroad (QROPS) need to be considered. If you receive a gratuity finance payment, which is common in Middle East jobs, on leaving that job the money can get some tax reliefs if paid into a pension in the UK. If you have a QROPS and return to the UK you do not need to transfer this back to a UK Scheme (this is a frequent misconception). Any income received from a QROPS will be subject to the tax rules at source as well as the tax rules in the UK (once you become a UK tax-resident). It is important to ensure a tax-treaty between the UK and QROPS home country exists to avoid being excessively taxed in both countries. Malta is a frequent home for QROPS plans and no tax is paid on income from a QROPS in Malta. If you are still working and plan to continue paying into a pension, then a QROPS would not usually allow you to make payments from the UK. The costs of having two schemes (QROPS overseas and UK scheme) may be unwise and advice on consolidation may be worthwhile.

Options for restructuring assets for tax efficiency

The impact of your repatriation on investments could be significant. Tax advantages enjoyed working abroad could be lost or penalised when back in the UK. Speak to a UK, FCA regulated financial advisor before repatriation to learn alternative options available, which may offer opportunities for growth or income.

The implication of early-exit fees and back end loads that can be in a product but you are unaware until you try to leave should encourage you to seek advice so you can consider options and alternatives. Any good UK advisor will clarify any fees you may be stung by on any investments you established while overseas.

Selling or realising investments and then returning in the same tax year can result in tax charges, for example, capital gains tax in the UK. If repatriating is not part of your original investment decision-making process or plans then you need to consider whether previous plans are now fit for purpose and fitting to the “new normal”.

The nuances of the financial and tax implications of repatriating to the UK means any international advisor or client should insist on independent advice from a specialist in the UK.

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UK Treasury funds for innovator firms

Coronavirus support targeted at innovative business structures of the tech sector has been announced today. Existing coronavirus support for businesses required companies to be profitable as of December 2019 to qualify for help so these new announcements make available funding for innovators. Last updated 20/4/2020.

There are two main pots of funding:

  • £750 million of loans and grants for innovative businesses available via Innovate UK;
  • £250 million investment fund for high-growth companies to match private sector investment via British Business Bank

R&D Innovators

The research and development will support 2,500 already supported by Innovate UK and 1,200 companies not currently supported will also be offered cash. Start-ups and businesses driving research and development will be able to access funding. Each company must pass an “innovation assessment” and no details about this are available currently.

Historically, the “innovation assessment” has been proposals scoring above a quality threshold (typically scoring over 70%) where 5 assessors score the level of innovation. The Innovation Assessment (Project) is based on 10 dimensions

A1: Need or Challenge
A2: Approach and innovation
A3: Project team and resources
A4: Market awareness
A5: Outcomes and route to market
A6: Wider impacts
A7: Project management
A8: Project risks
A9: Additionality
A10: Costs and value for money
Other funding from public sector sources
Project finance summary

 

Future Fund matched investing

Convertible loans from the “Future Fund” will be open to innovative companies which are facing financing difficulties due to the Coronavirus.

The Future Fund launches in May 2020 and will be a co-investment fund.

Eligibility:

  • Unlisted UK registered company;
  • Raised >£250,000 in aggregate from private third party investors 5 years; and
  • Substantive economic presence in the UK.

Terms:

  • The Government loan shall constitute no more than 50% of the loan round;
  • The Government loan minimum £125,000 and maximum £5,000,000.
  • Use of funds for working capital only;
  • Automatically convert into equity on  next qualifying funding round at a minimum conversion discount of 20%;
  • A minimum of 8% per annum (non-compounding) interest to be paid on maturity of the loan; and
  • Mature after a maximum of 36 months.

NB: These terms are subject to change.

Companies interested in the Future Fund should engage their existing network of private investors to understand if they would be willing to match financing the Future Fund.

We shall update this page as we learn more.

Financial Response clinics

Edale’s mission is to care for financial assets.

Financial planning is often a lower priority for people. We are in spectacular times where financial planning should be front of mind.

We’ve opened Financial Response clinics to give anyone free financial checkup on their circumstances. Book any time from 8am to 8pm, any weekday from now on. These are for existing clients of Edale and people new to Edale.  Edale’s (virtual) doors are open to anyone wanting a confidential discussion on their financial plan.

What should I do with my investment plan? My adviser cannot be reached.Client emailing Edale

Book your services with Edale through this form.

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Frequently asked questions

Who are Edale?
Edale are a regulated financial adviser and investment firm. The business is based in Surrey, UK but support clients across the UK and abroad.
I am an expatriate client can we speak?
Yes, we work with international clients.

What personal financial planning services do you offer?

DIY
Transactions without advice
Execution only

Deal fee + account maintenance

Edale as gateway to financial markets

Web tools and product information

Benefit from institutional partnerships

Whole service
For complex financial arrangements, working in partnership with other professional advisers
Wealth management

Variable prices

Complex financial arrangements

Frequent 1:1 contact

Monitoring + adjusting financial plan

Access to the team at any time

Advice on request
For client’s needing appropriate financial planning and have a one-off need for advice with no ongoing service.
On demand

Pay as you go

One-off need for advice

See team via pay-as-you-go model

Advice on specific circumstances

Mandate driven by you

Firms paying sick pay to employees

Legislation to allow small- and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

The eligibility criteria for the scheme will be as follows:

  • this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
  • employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
  • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
  • employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note
  • eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force

The repayment mechanism for employers has not been created as yet but will be available as soon as possible we understand.

Business rates support

There is a package of measures to support businesses with premises registered for business rates:

  1. 12-month business rates holiday for all retail, hospitality and leisure businesses in England.
  2. small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief.
  3. grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000.

Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.

Support for businesses that pay little or no business rates

Additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR). A one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs. If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.

Funding for the scheme will be provided to local authorities by the government in early April 2020.

January Sale – No initial fees [limited offer]

This January, we are very excited to providing an opportunity for financial sensibility and to rejuvenate your investments or take the financial steps you’ve been avoiding.

No initial fees to Voucher holders.Edale

Our special offer = get all initial fees from Edale waived for standard financial advice on pensions, ISA and general investment accounts.

This offer is open to UK resident clients. For special circumstances we can offer a discount on bespoke advice.

We are limiting this to offer to 20 clients that buy our advice voucher. The £10 voucher is refunded on completion of your investment account setup.

Examples of the cost of financial advice

Example 1
I’m approaching retirement with £100,000 in savings, a £150,000 pension and £100,000 in an investment Isa, and would like advice on drawing an income in retirement.
£2,540
average quote
Example 2
I’m 10 years into my career, with £60,000 in savings and £40,000 in an investment Isa. I’d like to start saving for my child university education.
£1,060
average quote
Example 3
I’m 50, with comfortable savings and no mortgage, and would like to invest a £100,000 inheritance.
£1,980
average quote

In August 2019, Which? surveyed 108 real financial advisers to get a sense of how much you could expect to pay for financial advice for a range of scenarios.  Here we show the average quote we were provided for each scenario.

Read more: https://www.which.co.uk/money/investing/financial-advice/how-much-financial-advice-costs-a1dwl4f8j8pf

Regulated financial firm
Experience business owners/leaders
Safe secure payment
Instant voucher download

Offer now closed.

Edale is authorised and regulated by the Financial Conduct Authority.

With ISAs, Pensions and general investment accounts, your capital is at risk.

Terms and Conditions

The January Sale is available between 1 – 31 January 2020, subject to availability. A voucher must be purchased and pre-paid and cannot be refunded, unless you open an investment account with one of Edale’s product provider.

Full Terms and conditions and information on Edale is available at www.edale.co/terms.

Edale UK Management Limited, trading as Edale and Edale Investments, authorised and regulated by the Financial Conduct Authority (Reference number: 812332) with offices at 15 Bell Street Reigate Surrey RH2 7AD UNITED KINGDOM.

Great whizz if IR35 affecting you and going on-payroll to keep more retained profits in your pocket

Speaking to clients that work as professional service contractors or working through their own limited service company many are reviewing the use of these going forward with new UK legislation from 6 April 2020. The new legislation aims to ensure workers operating through personal service or limited companies are paying the right levels of tax and national insurance and will crack down on “disguised employment”.

The personnel arrangements are not something we can address but for people going “on-payroll” as employees and reviewing the viability of keeping their limited company here’s a few financial planning ideas to distribute retained earnings and cash into a pension and use tax reliefs to improve your financial affairs for the future and keep as much cash as possible.

“Disguised employment” is where contractors operate in exactly the same way as their permanent counterparts but end up paying less to the public purse because of the operation of the service company.

Financial planning guide for closing a service company

If you are going on-payroll the validity of retaining the old company may be limited.

Distribute retained earnings and cash in a tax efficient way and improve your financial position.

Ltd company solvent liquidation
Solvent Liquidation is known as Members Voluntary Liquidation. A members' voluntary liquidation (MVL) is the formal liquidation process used to close down the affairs of a solvent company. Basically distribute retained earnings and cash to shareholders.
10% tax via entrepreneurs relief

Entrepreneurs relief allows you to pay less capital gains tax, at 10% on gains of all qualifying assets which are sold. It is applied when you sell your business, and usually in a Members Voluntary Liquidation (MVL)

Pension carry forward

Carry forward allows you to make pension contributions in excess of the annual allowance for three years. 

25% basic tax credit

The government will add 20% basic rate tax relief that effectively a 25% uplift. As a higher rate taxpayer you can claim back extra tax relief via self assessment.

25% drawdown at 55

People aged 55+ can withdraw a 25% tax-free lump sum from their pension. You pay Income Tax on the other 75%.

Close the company and access retained cash and earnings efficiently

If moving “on-payroll” the administrative costs to maintaining a limited company may be lost money. Just closing the company and distributing cash from the company will usually be taxed as income at your marginal tax rate if paid as dividends and if above £25,000 at income tax rates, the table below has England, Wales and Northern Ireland and Scotland income tax rates for 2019-20. Dividend taxes are 7.5%, 32.5% or 38.1%, depending on your marginal rate of personal tax.

Income tax rates 2019-20
Income tax rates for 2019-20 in England, Wales and Northern Ireland

Tax Rate (Band)Taxable IncomeTax Rate
Personal allowanceUp to £12,5000%
Basic rate£12,501 to £50,00020%
Higher rate£50,001 to £150,00040%
Additional rateOver £150,00045%

Income tax rates for 2019-20 in Scotland

BandTaxable IncomeSottish Tax Rate
Personal AllowanceUp to £12,5000%
Starter Rate£12,500 to £14,54919%
Basic Rate£14,549 to £24,94420%
Intermediate Rate£24,944 to £43,43021%
Higher Rate£43,431 to £150,00041%
Top Rateover £150,00046%

Paying the costs for a solvent liquidation means distributions from a liquidation are treated as capital and subject to Capital Gains Tax and the existence of entrepreneurs relief means gains are taxed at 10% above the annual capital gains tax allowance. There is a very simple worked calculation below on the benefits.

Worked example of solvent liquidation versus informal strike off

A single director/shareholder wishes to close their company on 30th April 2019 with £80,000 of retained workings.

£18,525
Informal strike off
total tax and fees
£9,100
Members Voluntary Liquidation
total tax and fees
£9,425
Saving
total tax and fees
Workings and assumptions
We’ll assume the following:

  • Retained profits are £80,000 – the informal strike off seeks to reduce this to £25,000 by paying dividends of £55,000
  • The director did not sell any personal assets in the year and has not used any capital gain allowances
  • The 2019/20 tax year dividend tax-free allowance is £2,000.
  • The director has no other income in the 2019/20 tax year
  • No salary taken from the company by the director
  • No dividend has been taken in the 2019/20 tax year to date
Informal strike offMVL
Retained earnings of company£80,000£80,000
Dividend to be taken from the company before 30th April 2019-£55,000-£2,000
Tax-free dividend allowance used 1-£2,000-£2,000
Dividend Tax Payable at 32.5%£17,225.00
Retained earnings after dividend paid£25,000£78,000
Annual capital exemption used 2-£12,000-£12,000
Amount of Capital Gain£13,000£66,000
Capital Gains Tax Payable 3£1,300£6,600
MVL advisor fee (estimated)0£2,500
Total tax and fees for comparison£18,525£9,100

1 To utilise tax-free dividend allowance. No other dividend issued
2 Individual capital allowance in 2019/20 tax year is £12,000
3 Entrepreneurs Relief rate of Capital Gains Tax is 10% in 2018/19 tax year

Upto £160k pension contributions + 25% immediate credit

Carry forward allows you to make pension contributions in excess of the annual allowance and receive tax relief. Carry forward allows you to make use of any annual allowance that you may not have used during the three previous tax years, provided that you were a member of a registered pension scheme.

£40,000 is the most you can pay in to your pension each tax year that ends each April. The UK government has created a carry forward that lets you take advantage of any unused allowance from the previous three tax years. That’s up to £40,000 from each year, so you are able to make a pension contribution of up to £160,000 plus receive basic pension tax credit plus higher rate tax relief if a higher income tax payer.

Remember investments go down in value as well as up so you could get back less than you invest. You normally can’t access your money until any time after your 55th birthday (57 from 2028) so pension are long term investments. There are additional rules about how much you earn, whether you are in Scotland where different income tax levels apply. So this is not advice, speak to us related to your personal situation.

£20,000
added to pension
£5,000
tax relief added
as 20% basic tax relief
£5,000
extra tax relief
if higher rate taxpayer
£15,000
effectively cost to for
£25,000 in your pension

Accessing your pension with tax free lump sum

If you’re 55 or over you can take 25% as a lump sum without paying tax. If you do this, you can’t leave the remaining 75% untouched. You must either:

  • buy a guaranteed income (annuity)
  • get an adjustable income (flexi-access drawdown)
  • take the whole pot as cash
Overview of how much tax you may pay on the money you take from your pension pot
The governments pension wise has a good table gives an overview of how much tax you may pay on the money you take from your pension pot.

The pension optionsWhat’s tax freeWhat’s taxable
Leave your pot untouchedYour whole pot while it stays untouchedNothing while your pot stays untouched
Guaranteed income (annuity)25% of your pot before you buy an annuityIncome from the annuity
Adjustable income25% of your pot before you invest in an adjustable incomeIncome you get from your investment
Take cash in chunks25% of each amount you take out75% of each amount you take out
Take your whole pot in one go25% of your whole pot75% of your whole pot
Mix your optionsDepends on the options you mixDepends on the options you mix

You should consider financial advice when accessing your pension as it is important to leave money to generate an income in later life.

 

Updating as we get more enquiries

We shall update this article from time to time as we get more questions from people this helps.

 

Independent financial advice

Let Edale help you manage your wealth.

Open all hours, 8 days a week

Unlike most financial institutions Edale operates an open all hours philosophy.

We help clients across many countries and time zones and different days of the week. In the Middle East where a working week is Sunday to Thursday and in Europe where its Monday to Friday we are always on hand. We are always on hand.

In addition, we also operate numerous communication methods to stay in touch with our clients to reflect their preferences for contact us or ask questions.

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