The number of expats returning to the UK in older age has ‘increased dramatically’ according to John Westwood, chairman at Blacktower Financial Management.
Speaking to FT Adviser, Westwood explored the challenges UK expats face and why it is so valuable for Brits to seek professional advice if they choose to move abroad.
Why UK expats are returning is due to a number of reasons, said Westwood, which include Brexit and the draw of family and health.
He said: “As people get older, they perceive the healthcare systems in Europe will not be as good as the UK, coupled with the fact that the older you get, the harder it is to maintain private healthcare.
"And so you get to an age where perhaps you can't renew your healthcare anymore, or certain conditions that you may suffer from are not covered.”
In terms of how easy it is for expats to plug back into the UK system, Westwood explained he has not seen clients having many problems if they invested well in Europe.
However, he warned people must reprogramme their wealth and assets to fit the UK tax system.
He said: “The value of assets in Europe is incredible, it has increased tremendously but the thing that you have to be aware of is actually reprogramming your assets and wealth, to fit in with the UK tax system, which is something that an adviser can help clients with.”
Seeking advice is ‘vital’
Westwood said it was "absolutely vital" to seek advice if you are looking to relocate abroad.
He said: “You’re coming from the UK where you’re used to UK customs systems and controls like HMRC to a country that has a totally different attitude towards personal wealth and lifestyle and the taxation systems are very different.”
Westwood called it a "complicated picture" and although an individual may be able to navigate it on their own, advisers understand both sides of the equation and can help clients with income planning, which he said is done differently in Europe.
“An adviser understands both the UK exit position and then re-basing you in the appropriate tax position in the country you’ve chosen to live in and that means there’s a big advice issue there that you will need to bridge very carefully before you step into that field,” he said.
In light of recent hints by chancellor Jeremy Hunt that further tax cuts could be on the horizon in the Spring Budget, Westwood highlighted that for UK expats it may be useful exploring whether taking tax residency in an international jurisdiction is worthwhile.
He said: “You have to look at whether you want to keep your UK tax residency and keep that umbilical cord still in place between the UK and where you are living abroad.
“You also need to work out how much time you're going to be there because if you choose to spend a lot of time in your home in Europe, then of course, local tax rules will deem you a tax resident, even if you think you're still a UK tax resident over a period of time.”
Therefore, Westwood stressed again why seeking financial advice was so important for expats because many people can find themselves technically a tax resident in the country they have chosen to live in for part of the year without realising.
Relocating for work vs lifestyle
Although there has been an increase in the number of older people returning back to the UK, Westwood pointed out that a lot more younger people are now moving abroad for work.
The four main countries in demand for expats are Portugal, Spain, Italy or France, according to Westwood.
He said: “We're seeing a lot more UK nationals taking that jump to work internationally and looking to do that actively.”
In terms of people choosing to move abroad for lifestyle reasons rather than work, it has become more complicated, suggested Westwood.
One of the reasons for this is the surge in property prices in popular expat resort areas.
Westwood said: “You have suddenly got a situation where you are capitalising on your assets in the UK but the value of the price of living in Europe has gone up significantly so you need to take that into account.
“If you’re jumping in for a lifestyle reason you have simply got to make sure you’ve got enough money to create the income you’re going to need to live within Europe, it isn’t the cheaper option that it perhaps used to be.”
alina.khan@ft.com
