How Expats Can Protect Their Wealth When Returning To The UK

Moving back to the UK from the Middle East is a big move and your financial strategy will need some adjustments. Without proper planning, you could be greeted with extra tax and a massive headache on your return, as well as the rainy weather.

Here’s how to avoid some of the most costly mistakes of moving back to the UK from the Middle East.

1. Understand HMRC’s Rules

HMRC gains full visibility of your global assets as soon as you touch down on UK soil to live. A poorly structured portfolio could therefore be at risk and you may face:

• Capital Gains Tax (CGT) on worldwide assets.
• Dividend taxes on investment income.
• Inheritance tax on cross-border wealth.

Action Step: Know your tax residency status and prepare early.?

The UK Statutory Residence Test will determine your obligations, and getting this wrong could mean paying more than you need to.?

2. Consider an Offshore Portfolio Bond (PPB)

A Portfolio Bond (PPB) is a tax-efficient investment wrapper that helps expats returning to the UK minimise their tax exposure.?

Here’s why it matters:

• Tax deferral: Investments can grow without immediate tax liabilities.
• 5% annual withdrawals: You can access up to 5% of your original investment each year without any tax due. Effectively withdrawing in a very tax-efficient manner over the longer term
• Time Apportionment Relief (TAR): This reduces taxable gains based on how long you spent as a non-resident.

Action Step: Explore PPB options before returning to the UK so you don’t miss out.

3. Avoid Common Platform Pitfalls

Many investment platforms lure expats with low fees, but their service isn’t fit for service when it comes to taxation, leaving many individuals at risk.

Example:

• Gary invested ￡400,000 via a general investment account (GIA) while a resident in Dubai. He was lured by the cheap cost of this platform but was unaware that a GIA is “tax transparent” meaning any income (such as dividends or interest) or gains (such as capital gains) generated by the investments held within the GIA are treated in the same way for tax purposes as if the investor directly owned those investments. Gary made a gain of 100,000 GBP and forgot to rebase his assets before returning.?
• On his return to the UK, he, therefore, faced a ￡24,000 CGT bill.

With a PPB, he could have deferred this tax and strategically reduced it over time.

Action Step: Shift from tax tra platforms to tax-efficient portfolio structures with professional advice.?

4. Leverage Spousal Transfers

Tax allowances double when you use both partners’ names strategically. For example, you can:

• Transfer assets to a lower-earning spouse: This reduces tax on your investment income.
• Share the 5% PPB withdrawal allowance: Doing so can potentially double your tax-free withdrawals.

Action Step: Discuss spousal transfer strategies with your financial adviser before you relocate.

5. Prepare for UK Inheritance Tax (IHT)

Inheritance tax isn’t just a problem for the wealthy and if you maintain UK domicile status, 40% of your worldwide estate above the ￡325,000 threshold could be taxed.

Here’s how to avoid paying too much IHT:

• Gift assets early: This can effectively reduce your taxable estate.
• Use tax-efficient trusts: These help protect your family’s wealth across generations.

Action Step: Get started sooner rather than later.

IHT and estate planning, in general, takes time, especially when assets span multiple countries, which is the case for many expats returning to the UK.?

Final Thoughts

Returning to the UK requires more than booking flights, packing boxes, and other run-of-the-mill logistics. It’s also about reconsidering your financial strategy, ensuring that it’s still as tax-efficient as possible when you get back to the UK.??

Ready to secure your UK tax strategy? Schedule a call today.