Expat Secrets: How Savvy Retirees are Maximising Their Wealth in Gibraltar

There is a multitude of reasons why retired Brits with healthy passive incomes choose Gibraltar as the perfect spot to retire to.

Retiring to Gibraltar means better weather and lots of opportunities among a vibrant expat community – but the ability to efficiently manage their wealth is the primary motivation for most who choose the British Overseas Territory as their retirement destination.

How does Gibraltar’s tax system benefit retirees?

Any British person retiring to Gibraltar is free to leave their pension in the UK, with any drawings on it subject to UK tax – which can be as high as 40%.

Understandably, many British expats opt to move their UK pension benefits to a Gibraltar-based Qualifying Recognised Overseas Pension Scheme (QROPS). Doing so will mean your pension is subject to a Gibraltar tax rate of just 2.5% and could also offer greater investment flexibility.

If you retire to Gibraltar, leave your pension in the UK and then die after the age of 75, any benefits going to your spouse will be subject to income tax. But the rules for a Gibraltar QROPS are different. If your spouse is the nominated beneficiary and they remain in Gibraltar after your death, tax on pension drawings is capped at 2.5%.

One potential drawback to shifting your pension to a Gibraltar QROPS worth thinking about is the lack of flexibility. Once you hit 55 in the UK, you can get your hands on as much or as little of your pension as you like. That’s not the case in Gibraltar. QROPS members can only withdraw a tax-free lump sum of up to 30%, with 70% left to provide a pension income.

Real estate investments

Many retirees are investing in property on the Rock, whether for rental income or personal use. Because of the territory’s location, small size and other advantages, demand will always outpace supply, virtually assuring value appreciation and strong rental yields.

There’s no capital gains tax in Gibraltar, ensuring investors max out both their returns and their profits.

The rental market is buoyant with demand for rental properties always high, especially in the business district.

There are always new development and regeneration projects coming down the pipe, giving investors a spread of good property options to consider.

The great inheritance tax myth

Contrary to popular belief, retirees cannot just move to Gibraltar and be completely shielded from UK inheritance tax.

But a qualifying non-UK pension provides substantial protection against inheritance tax, making it a key component in estate planning for expats in Gibraltar. Its ability to keep assets outside the scope of UK inheritance tax for UK domiciled individuals offers a significant benefit for those wishing to efficiently transfer wealth.[RF1]?

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The best step you can take is to speak with an experienced, Gibraltar-based professional advisor who can help legitimately reduce your exposure to UK inheritance tax.

Click here for our access to our Relocating to Gibraltar and Living in Gibraltar guides, as well as a wealth of other expat guides all packed with invaluable insights and strategies for successful wealth management abroad.

What is the cost of living in Gibraltar?

The cost of living in Gibraltar is far cheaper than London. Day-to-day expenditure is helped by the absence of VAT and lower utility costs which allows retirees to spend more of their money and time on leisure and wellness activities.

In short, Gibraltar provides ample opportunity for UK expats to live out a long, fulfilling retirement, safe in the knowledge that their wealth is being maximised.

Without the right expertise to guide you, people relocating to Gibraltar can find themselves at risk of losing out on ￡￡￡s by making the wrong decisions when it comes to tax planning. If you are thinking of starting a new life in Gibraltar, our comprehensive three-hour Masterclass offers in-depth financial and finance insights to ensure you avoid the costly pitfalls.

If you’re looking for help and advice on how to make the transition as stress-free as possible, click here to sign up.??

Established in 2007, Fiduciary Wealth Management is dedicated to positively shaping the wealth of the expatriate community through tax led advice. Our guidance is objective, impartial and tailored to support your financial goals.