How to manage your UK investments when moving overseas.

Moving from one country to another can be stressful. Important things are easily be forgotten about, in the midst of planning your new life overseas.

Taking investments across borders requires some careful consideration, to avoid expensive tax headaches.

Find out if your existing accounts will be closed

There’s nothing worse than receiving a letter saying you’ve got 30 days to move your money – because your account is being closed.

But it can be surprisingly common for expats! In 2023, Barclays UK closed the accounts of all clients living outside of the UK.

Many UK banks, life insurance provider, and investment platforms, don’t want the regulatory headache of dealing with people living outside of the country.

Some providers may allow to you keep your current arrangements, but limit contributions, or not allow you to open new ones. Others may close your account altogether.

The only way to find out, is to contact your provider before you move.

The good news ➞ if your existing arrangements can’t support you living overseas, there are many alternatives catered to expats.

Check your tax wrappers still work

If you’re moving from one country to another with ‘tax-protected’ investments, these might not be recognised in your new country of residence. It’s a common mistake amongst globally mobile expats.

Private pensions usually travel quite well, but for everything else, it becomes more complex.

Common problems for British expats include:

Onshore Bonds will still be subject to UK basic rate income tax.
UK Pension contributions are limited to £3,600 (gross) per year.
Savings interest from UK accounts remains subject to UK income tax.
ISAs aren’t tax protected outside of the UK, and you can no longer make contributions.
Investment-linked life insurance policies (like onshore/offshore bonds) often need to comply with local rules in Europe.

Non-compliant investment structures are often looked-through. Meaning you could owe tax on any income and gains within your account, even if the funds aren’t withdrawn.

Find out the tax status of your investment funds

If you hold investment funds from one country and move to another, you might be punitively taxed.

Many countries require investment funds, like ETFs and Mutual Funds, to report their annual income and dividends to the tax authorities. Those that fail to do so, are often taxed at a higher rate.

Examples include:

The UK – growth from overseas non-reporting funds are taxed as income instead of capital gains.
US PFIC rules – gains from non-US investment products are taxed as income instead of capital gains.
Belgium – Reynders tax, means multi-asset funds containing bonds can have 30% tax applied to capital gains.
Switzerland – funds not on the Kurlisten may be subject to tax on capital gains, which would otherwise be tax free.
Portugal – savings and investments held in countries on their tax blacklist, are subject to 35% aggravated tax on income and growth.

When to sell your winners?

With different rules around tax residence, and different tax rates, it can be beneficial to arrive in your new country with a clean slate.

If you’re moving to a taxable jurisdiction, it is often prudent to sell your investments before you arrive. This means any previous capital gains, won’t be subject to tax in your new country.

Timing can be key – you might be able to do this immediately before you arrive. Or it may need to be done before the start of the current tax year.

The decision depends on whether you’ll be treated as a tax resident from the start of the tax year? Or if split-year treatment means you’ll be considered non-resident until you actually move.

If you’re moving to a tax-free or low-tax country, it might be beneficial to wait until after you’ve moved, then realise gains at a lower tax rate.

Keep your losers

Many countries allow investment losses to be offset against future gains. So hanging onto investments currently valued at a loss, can be a useful tax planning tool.

If you move with investments worth less than you purchased them, then sell them once you arrive, you’ll have a tax-loss to offset.

Depending on the country you move to, you may be able to offset your loss against gains years in the future, or it may need to be used in the same tax year.

Consider tax-protected investments or offshore accounts

Depending on where you move to, you may be able to access locally recognised tax-protected investments.

These can allow your funds to grow free of tax, and may even reduce tax on withdrawals if held for long enough – particularly of note for the UK, France, Greece, Portugal, Spain, and Australia.

In certain circumstances, these tax-wrappers can even bet set up whilst living overseas.

Alternatively some countries don’t tax investments held offshore by expats – like Cyprus, Costa Rica, Georgia, Ireland, Malta, Malaysia, Philippines, Panama, Singapore, Thailand, and Uruguay.

Opening an offshore investment account, in a well-regulated and tax-friendly jurisdiction, could allow your funds to grow free of tax, and allow access to a wider range of investments.