The global pandemic has changed many aspects of our lives. As a result, many British expats have re-evaluated whether to continue living abroad, or head home earlier than expected. Peter Webb, our Head of Tax Advisory, explores how plans are changing, and what to be aware of.
In a recent poll as part of our webinar series, more than a third of our expatriate clients (39%) said they now intend to return to the UK earlier than originally planned as a result of the pandemic.
A number of issues are helping to accelerate these decisions including concerns about long-term travel and employment options and the availability of vaccines.
The poll outcome wasn’t too much of a surprise, especially given recent media reports and our own experience which has seen our Tax Advisory team spending a large part of their time speaking to British expats looking to return to the UK earlier than originally planned.
One of the common scenarios we’re seeing is the decision that one spouse will return to the UK first, mainly with the aim of arranging children’s schooling for the Autumn 2021 term, with the other spouse – usually who has the higher income – intending to remain overseas for the short term, returning at a later point once a new home, schooling and employment plans have been arranged.
Against this backdrop, which can be very challenging both personally and practically, there are key steps to consider. Ultimately the old adage rings true – there are a lot of ducks which you need to get into a very neat row if you’re planning a relocation to the UK, particularly if it’s come about faster than you’d expected.
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With logistical concerns often taking precedence, especially if you’re facing a hard deadline such as the start of the school year, personal finances can often find themselves low on the priority list. But any return to the UK – even if it’s just one family member – could create unexpected tax bills.
By creating a link to the UK, whether it’s by moving permanently, or even just renting or buying a new property, you can trigger a switch in your resident tax status. This ultimately determines how much tax you will pay in the UK. There are several common mistakes that can expose you to tax – even before you arrive home – so it’s important to seek expert advice which can support you at each step of the process.
There will also be some practical things to consider before you leave your overseas home, as well as some tax-efficient investment strategies you can adopt once back in the UK.