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UK expat retirees urged to do homework before emigrating
| Published: | 9 Aug at 6 PM |
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Tagged: Currency, France, Spain, Property Abroad, USA, Australia, UK, New Zealand, Canada, Cyprus, Italy, Thailand, Euro, Emigration, Exchange Rates, Pension Transfer, England
Spain’s position as an all-time favourite retirement haven for older Brits seeking sunshine and sangria is still unrivalled, but France, Italy, Portugal and Far East destinations such as the Philippines and Thailand are still getting attention.
A recent survey of Britons approaching retirement has revealed the main attractions of quitting the UK are better weather, a cheaper cost of living and a more relaxed lifestyle. In the initial excitement of planning a new life in an unfamiliar new country, it’s easy to forget realties such as currency fluctuations, confusing tax regimes and pension-related issues, all of which can knock the gloss off a comfortable retirement. Doing the necessary homework before getting on the plane can make sure no nasty shocks await you on your arrival in your dream destination.
Perhaps the best-known and most resented issue is the UK’s frozen pension rule, itself devoid of any logic and the subject of endless pleas to MPs by those affected. For the few who’re not now aware of how this law can affect the rest of their lives should they choose the wrong country, UK expats living in EU member states and in the USA are at present entitled to annual increases as if they are still resident in the UK. Choose Canada, Australia, New Zealand and many other countries, and your pension stays the same however long you live. One unfortunate long-term British resident in Australia is receiving the same amount as when she emigrated decades ago – a few pence more than six pounds sterling!
For those wishing to settle in Europe, Brexit is the worst news ever as there’s no guarantee at all that pension increases will still be paid after Britain’s divorce is finalised. Nor, of course is there any guarantee British residents will be able to stay in Europe. If neither of the above scenarios are cause for concern and you’re determined to buy a retirement home in your new country, be prepared for an ever-increasing amount of local bureaucracy and legalities. Basically, stricter lending rules and increasing property taxes are making the purchasing of a home more difficult in the majority of expat hubs abroad.
Foreign governments tend to view expat property purchases as a never-ending cash cow as regards tax, with their immovable nature making them impossible to hide. Traps to avoid include title deed scams, a favourite in Cyprus and Spain, as well as the fact that in many Asian countries it’s illegal for expats to own land. Obtaining an overseas mortgage is becoming more of a lottery, as many foreign banks are now questioning proof of affordability as well as having to monitor exchange rates if payment is being made in sterling. Should the currency fall below a certain rate, home loans will have to be renegotiated. Overseas property taxes are another pitfall for the unwary, with different laws for capital gains tax on value growth, stamp duty at point of purchase and even inheritance tax.
A recent survey of Britons approaching retirement has revealed the main attractions of quitting the UK are better weather, a cheaper cost of living and a more relaxed lifestyle. In the initial excitement of planning a new life in an unfamiliar new country, it’s easy to forget realties such as currency fluctuations, confusing tax regimes and pension-related issues, all of which can knock the gloss off a comfortable retirement. Doing the necessary homework before getting on the plane can make sure no nasty shocks await you on your arrival in your dream destination.
Perhaps the best-known and most resented issue is the UK’s frozen pension rule, itself devoid of any logic and the subject of endless pleas to MPs by those affected. For the few who’re not now aware of how this law can affect the rest of their lives should they choose the wrong country, UK expats living in EU member states and in the USA are at present entitled to annual increases as if they are still resident in the UK. Choose Canada, Australia, New Zealand and many other countries, and your pension stays the same however long you live. One unfortunate long-term British resident in Australia is receiving the same amount as when she emigrated decades ago – a few pence more than six pounds sterling!
For those wishing to settle in Europe, Brexit is the worst news ever as there’s no guarantee at all that pension increases will still be paid after Britain’s divorce is finalised. Nor, of course is there any guarantee British residents will be able to stay in Europe. If neither of the above scenarios are cause for concern and you’re determined to buy a retirement home in your new country, be prepared for an ever-increasing amount of local bureaucracy and legalities. Basically, stricter lending rules and increasing property taxes are making the purchasing of a home more difficult in the majority of expat hubs abroad.
Foreign governments tend to view expat property purchases as a never-ending cash cow as regards tax, with their immovable nature making them impossible to hide. Traps to avoid include title deed scams, a favourite in Cyprus and Spain, as well as the fact that in many Asian countries it’s illegal for expats to own land. Obtaining an overseas mortgage is becoming more of a lottery, as many foreign banks are now questioning proof of affordability as well as having to monitor exchange rates if payment is being made in sterling. Should the currency fall below a certain rate, home loans will have to be renegotiated. Overseas property taxes are another pitfall for the unwary, with different laws for capital gains tax on value growth, stamp duty at point of purchase and even inheritance tax.
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