Top 10 financial questions for would-be migrants

When considering living outside the UK, ask yourself the following questions, say migration finance experts Montfort International plc.
1. Should I sell or rent out my UK home?
2. Shares – Do I sell? Do I buy more and if so when?
3. Offshore Investment? Will it work for me?
4. Pension Funding - When do I stop contributing or when do I put more in?
5. Do I transfer my Pension Fund and if so, when and to what?
6. Sterling is extremely weak at present so can I control the foreign exchange rate I get on the money I transfer and if so how?
7. What happens if I don’t like my new land and decide to come back?
8. Should I have a UK Income Protection policy or a local one?
9. UK State Pension? What do I do?
10. Life Policies. Should I cancel them before I go – what do I do?
Whatever your financial intentions, seeking guidance early from the qualified advisers at Montfort International (freephone 0800 018 3571) before you finalise your migration plans can help you to a more comfortable life abroad.

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Protect your property from the tax men (5)
The last of a five part series of advice from experts Montfort International plc for home-owning migrants
Tax on the sale of your property
A property which has always been your main residence will qualify for principal residence relief upon sale and will not be subject to UK capital gains tax (CGT). Where an individual has only occupied his property for part of the period of ownership, a proportion of the gain upon sale could be assessable to tax. Note, however that, upon emigration, it is possible to remove yourself outside the scope of UK CGT provided that you are neither resident nor ordinarily resident in the UK for a minimum period. This can provide excellent planning opportunities for individuals who own more than one property in the UK although you will however need to consider Australian CGT.
As previously stated, Australia will tax most residents on their worldwide capital gains. The Australian tax system allows you to claim main residence relief in a similar way to the UK. When a property has not been your main residence for the entire period of ownership, you may only be granted partial exemption.
Fortunately, though, in some instances you can choose to have a property, including your UK property, treated as your main residence for CGT purposes despite not actually living there. Failure to keep your tax affairs up to date can result in penalties and interest on late payments.
If you believe that renting out your UK property may be a viable proposition, seek specialist mortgage and tax advice to ensure you stay on the right side of both the UK and Australian tax offices. Few UK accountants or advisers will be able to advise on the Australian tax situation, so talk free to one that does, Montfort International plc, on 0800 018 3571.

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Protect your property from the tax men (4)
The fourth of a five part series of advice from experts Montfort International plc for home-owning migrants
Releasing equity
In most cases, the home is an individual's major asset and it may be necessary to release equity from the property to help finance the move. If there is a mortgage against the property you cannot sell and decide to rent out, you can claim the interest charged on that loan as a deduction for UK tax purposes. If the remortgage is not structured correctly you may find that the interest on the additional borrowing is not tax deductible in Australia.
Before remortgaging, you will need to ensure that the selected lender will give you permission to let out your property. Generally buy-to-let mortgages carry hefty arrangement fees and the rates are higher than that on a residential basis. As such, it may make sense to remain on a residential mortgage if your lender will grant permission to let. If you are looking to remortgage, there are a few select lenders who will still grant you permission to let once you have lived in the property for a relatively short period after you have taken out the new loan.
You may wish to opt for a fixed rate deal so that you know what your outgoing will be each month and to help you budget. If you intend to sell the property at the earliest opportunity you may opt for a deal with a short term fixed rate or minimal redemption penalties.
If you believe that renting out your UK property may be a viable proposition, seek specialist mortgage and tax advice to ensure you stay on the right side of both the UK and Australian tax offices. Few UK accountants or advisers will be able to advise on the Australian tax situation, so talk free to one that does, Montfort International plc, on 0800 018 3571.

Reluctant Landlords 3

Protect your property from the tax men (3)
The third of a five part series of advice from experts Montfort International plc for home-owning migrants
Australian Tax on rental income
Australia will generally tax residents on their worldwide income and capital gains. Permanent residents need to include rental income from their UK property in their Australian tax return but can claim a credit for any UK tax paid to avoid double taxation. You should keep proof of all expenditure to ensure you can claim tax deductions for everything you're entitled to, including rates, interest, insurance, letting agent fees, depreciation and capital works.
The profit will be taxable at the highest marginal rate of the individual who owns the property to a maximum of 46½%. If a property provides a positive return, higher rate tax payers may wish to consider transferring ownership to a lower income earning spouse. However, if deductions exceed the rental income and the property makes a loss, this can be offset against other assessable income so it may be advantageous for the higher earning spouse to hold sole ownership of the property. You should also consider how this will affect your capital gains tax position at time of disposal before reaching any decisions on whether you should transfer ownership.
If you believe that renting out your UK property after migrating may be a viable proposition, seek specialist tax advice to ensure you stay on the right side of both the UK and Australian tax offices. Few UK accountants or advisers will be able to advise on the Australian tax situation, so talk free to one that does, Montfort International plc, on 0800 018 3571.

Reluctant Landlords 2

Protect your property from the tax men (2)
The second of a five part series of advice from experts Montfort International plc for home-owning migrants
UK Tax on rental income
Any income you receive from letting UK property is taxable in the UK after deduction of allowable expenses, even if you cease to be a UK resident.
Once you are living in Australia you will be a non-UK resident landlord so your letting agents (or your tenant if letting agents are not employed) are obliged by law to deduct tax at the basic rate from the gross rent, less deductible expenses. They can only pay your rent gross if they have HM Revenue & Customs' (HMRC) authority. Provided your tax affairs are up to date you can apply for approval to have your UK rent paid gross by completing the appropriate form and forwarding it to the Revenue.
HMRC will usually send you a Self Assessment Tax Return once a year to establish whether you have any tax to pay. If the profit does not exceed the UK personal allowance (assuming you qualify) there is no tax to pay.
If you believe that renting out your UK property after migrating may be a viable proposition, seek specialist tax advice to ensure you stay on the right side of both the UK and Australian tax offices. Few UK accountants or advisers will be able to advise on the Australian tax situation, so talk free to one that does, Montfort International plc, on 0800 018 3571.

Reluctant Landlords 1

Protect your property from the tax men (1)
The first of a five part series of advice from experts Montfort International plc for home-owning migrants
The tax implications for 'reluctant landlords' bound for Australia.

Due to the currently weak state of the UK property market, some prospective migrants are finding themselves becoming 'reluctant landlords' as they are unable to sell their home prior to emigrating. Most do so in the hope that it will be for the short term and plan to sell once the property market picks up again. In reality however it could still be some time before this is the case, meaning there is a danger of new landlords becoming unstuck if failing to plan appropriately.
With the amount of regulation involved and the difficulty posed in managing the property from such a distance, you would be well advised to consider employing a good letting agent to manage the property for you. It is important that you fully understand your responsibilities as a landlord and it is worth seeking specialist advice regarding your tax position in both the UK and your new home country.
If you believe that renting out your UK property may be a viable proposition, seek specialist mortgage and tax advice to ensure you stay on the right side of both the UK and Australian tax offices. Few UK accountants or advisers will be able to advise on the Australian tax situation, so talk free to one that does, Montfort International plc, on 0800 018 3571.

Migration Finance Expert Advises Caution

Many migrants waiting for news about whether their UK state pensions will be indexed could find themselves worse off by pinning their confidence on a win in the European Court of Human Rights (ECHR) with their challenge against the way the UK state pensions legislation penalises those who retire to Australia.

British state pensions remain payable to those who move to another country after retirement, but it is frozen at the rate it was when they leave Britain unless their destination country has an agreement with the UK. Unfortunately UK and Australia once had an agreement, signed up to by Australia which was subsequently cancelled – for some reason Australia agreed to no indexation of benefits from the UK.

“Should the case be won much of the win for Australian pensioners will be devoured either by taxation or by 40% of each £ won being deducted from their Australian Age pension - and its likely to be retrospective.” says Geraint Davies, Managing Director of migration finance specialists Montfort International. “However, many migrants can make up their benefits by efficient tax and financial planning pre-departure utilizing the interaction benefits created by a Qualifying Recognised Overseas Pension Scheme (QROPS).”

If moving to Australia, specific care should be taken by anyone who has entitlements to a UK age pension

UK IFAs Beware!

Any UK Financial Adviser who supplies advice to a client who has the potential to live in any other country has to be extremely careful. We only have to look at the 3½ year old phenomenon of the Qualifying Recognised Overseas Pension Scheme (QROPS). UK options are simply not always the best retirement planning options; indeed a combination of UK and overseas options may be most suitable advice.

If a client clearly has
a) A connection with another country and or
b) A passport for another country and or
c) A spouse from another country and or
d) Has the right of abode in another country and or
e) When asked about future plans (a key aspect of financial planning) mentioned his or her wish to migrate
then QROPS will have to be factored into every aspect of pension advice provided to that client.

QROPS will have to be considered too when pension or retirement planning guidance is provided to any client – even if only to deny the import of a QROPS for that client’s circumstances.

The Financial Services Authority has made clear the need for specialist advice where potential QROPS circumstances prevail. If a Financial Adviser doesn’t find out all the facts they fail the “know your client” rules. If a Financial Adviser doesn’t do this but gives advice with disclaimer after disclaimer in place (i.e. the advice has not factored in the differing circumstances in your chosen country of residence or the advice is only suitable should you intend to remain in UK) then only those clients who don’t read the caveats are going to proceed.

QROPS has arrived.

ECHR to rule on UK State Pensions for those retiring to Oz and NZ

There has been a two-hour hearing at the European Court of Human Rights (ECHR) today of a challenge against the way the UK state pensions legislation penalises those who retire to certain countries.
British state pensions remain payable to those who move to another country after retirement, but it is frozen at the rate it was when they leave Britain unless their destination country has an agreement with the UK.
Around a million British pensioners live overseas; about half of them in the European Economic Area, Switzerland and countries including the US, Jersey and Jamaica that have reciprocal agreements with Britain. Those pensioners benefit from the annual pension increases in line with UK inflation as if they still lived in the UK.
Australia and New Zealand are among those countries with no such agreement, so some half a million retirees do not benefit from any increases in the rates of UK pensions after they retire or, if they have already retired, the day they emigrate.
The UK Department of Work and Pensions says the government is concentrating on the needs of pensioners living in the UK. In 2005 a House of Lords ruling agreed that those migrating abroad do so voluntarily and in doing so put themselves outside the primary scope and purpose of the UK social security system.
The ECHR judgment is not expected until the spring of 2010.

Currency expert says "Pound could strengthen in coming months"

It is likely the pound will perform increasingly well against other currencies in the coming months, according to Marc Cogliatti, a currency strategist at exchange specialist HiFX, reported by expatriatehealthcare.com on 20 August 2009.

Mr Cogliatti explained that his opinion that the pound should "appreciate against the vast majority of its counterparts" is based on the UK being well prepared for the end of recession.

This would have a hugely beneficial impact on those planning to migrate and to British expatriates who have kept their funds in sterling, as the same number of pounds would buy more of the currency of their destination state.

Geraint Davies, MD of migration experts Montfort International plc warned that anyone emigrating should ensure they seek proper, professional advice before transferring their assets abroad to avoid adverse tax as well as foreign exchange rate implications.