Faced with a perfect storm of rising taxes and falling living standards, many more people are looking to up sticks and head overseas.
But irrespective of whether you’re moving abroad for work, retirement or for a life-changing experience, there are certain things you need to do before you go.
Leaving Britain to embark upon a new life in a new country comes with its own set of financial challenges.
Mike Harvey, managing director at 1st Move International, said: “Before departing, it’s crucial to take a series of important steps to help the relocation process.”
It’s far easier to organise things before leaving the country than to try to organise things from your new home – especially if the move means you’ll no longer be a tax resident in the UK.
Here’s a rundown of some of the key things you need to think about to ensure your transition goes as smoothly as possible:
If you’re going to move or retire overseas, one of the first things you need to do is get in touch with your local authority and provide a forwarding address. If you receive any benefits, including the state pension, you also need to let the benefits offices know that you’re moving.
Sarah Coles from Hargreaves Lansdown, said: “They’ll tell you if you’re still entitled to payments.” This will depend on the benefits in question, where you’re moving to and how long you’re going for.
Ms Coles added: “In some cases, you will be able to claim locally instead.”
To find out more about claiming benefits abroad, head to Gov.uk.
You’ll need to let your bank know you’re moving, and give it your new contact details.
Mr Harvey said: “Be sure to update account information, manage standing orders, and set up international transfers. Don’t forget to check which cards work overseas.”
If you plan on staying with your British bank after you move, it’s well worth signing up for online mobile and phone banking, as this will make it easier to get in touch since you’ll be too far away to pop into a branch.
However, in many cases banks may insist you close the account – unless you’re only moving temporarily. That’s because some providers require you to have a UK address.
If this is the case, you’ll need to find out if there’s an international bank account you can switch to.
Opening an account in your new country can help you avoid unnecessary transaction fees and remove worries about currency fluctuations when making money transfers. This can help make day-to-day life that little bit cheaper.
Before moving, you will need to speak to your Isa (individual savings account) provider about your plans to move.
The good news is that you can typically keep your Isa open even after becoming a non-UK resident – but you cannot continue making deposits.
Helen Cuthbert, from advisory and accountancy firm Menzies LLP, said: “While you won’t be able to make further contributions to your Isa while residing outside the UK, your existing Isa pot will continue to grow within its tax-efficient wrapper.”
What you do need to check are the tax rules in the country you’re moving to.
Ms Cuthbert added: “It’s crucial to assess the tax environment in your new country of residence, as the activity within your Isa may become subject to taxation there. Being proactive about this can help you navigate potential implications more smoothly.”
You need to keep repaying your student loan when you move overseas.
While this may sound relatively straightforward, the process actually becomes a bit more complicated when you’re not living in Britain. For one thing, you’ll have to take action to make your student loan repayments – which many British workers will be unfamiliar with.
Ms Coles said: “HM Revenue and Customs (HMRC) will no longer take the money automatically from your pay, so you need to tell the Student Loans Company what you’re earning. You’ll be required to provide evidence for those earnings, too. Based on this, the SLC will then set your repayment schedule.”
Take care to get everything sorted quickly – and be sure to keep up with repayments – or you could face a fine.
When it comes to retirement savings, the short answer is: you don’t need to do anything about your pension before you move abroad.
Robert Cochran, retirement expert at Scottish Widows, said: “You can leave your money behind in the UK and it will still belong to you to access at a later point in life.”
However, there are a few steps worth taking before you move.
Mr Cochran said: “Do a bit of research, track down your pensions and make sure you have the details of how to contact the providers.”
You will need to notify your pension provider of your impending change in residency status and provide details of your new country of residence. The firm can then update its records and work with you on how best to manage your pension moving forward.
Some tax benefits you receive as a British resident may also be taken away.
Rebecca O’Connor, from PensionBee, said: “While you are abroad, you can continue to pay into your UK pension if you wish, but be aware you may not continue to receive the same level of tax relief on contributions.”
Consider an overseas pension scheme
With this in mind, you may want to speak to your pension provider about transferring your existing pot to a new overseas pension scheme.
Ms O’Connor, said: “You are fine to do this, as long as the scheme you are moving it to is a ROP (Recognised Overseas Pension).”
This is one that HMRC considers eligible to accept transfers from pension schemes registered in Britain.
You can ask your pension provider for guidance on this.
Mr Cochran said: “For some locations, it will make sense to transfer your pension pot. For others, it might make more sense to leave the money in the UK and pay income to an overseas account. Tax treatment will have a big part to play in your decision-making.”
Note that Britain has just introduced a new “overseas transfer allowance”, which is the maximum you can transfer to an ROP. For the 2024-25 tax year, it is set at £1,073,100 for most people.
Given that pension decisions can often be complex, it may be well worth contacting a specialist adviser to go through your options before moving abroad.
The effect on your state pension
If you’re worried about what will happen to your state pension if you relocate, the good news is that you will still be entitled to claim it.
You need to contact the International Pension Centre to inform it you’re moving – and to check your position.
The state pension can be paid into a UK bank account or an international account. But if it’s paid into the latter it will be paid in the local currency, so the amount you get will depend on the exchange rates at the time.
Ms Coles said: “In some countries, your state pension will continue to rise with the triple lock in the same way as it does in the UK. In others, it will be frozen on the day you leave, so you need to know where you stand.”