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.

  • Appointment Info

  • Your Info

Scroll to Top