The tax implications of returning to the UK

"Restructuring your investments before moving home could mitigate your tax liabilities," says Giles Henman.

Financial planning is an important and often overlooked step in returning home for many British expats living in China.

While most plan to repatriate at some point, whether they’ve been away for two, ten or twenty-five years, a financial exit strategy rarely ranks highly on the to-do list. But seeking the right advice can help to mitigate tax charges, paperwork, and delays that come with moving your money home.

Returning with your capital

You may have saved money and acquired assets offshore but, as a British ex pat, any worldwide assets you hold are subject to UK tax when you return home.

This includes any overseas savings as well as property and company shares, which could become liable for capital gains and income tax as soon as you repatriate. Even investments that have not been subject to tax whilst living abroad are subject to UK tax so it’s important to seek advice and ensure you only pay tax on any gains going forward rather than those made previously.

The aim is to return to the UK with restructured assets that will be subject to fewer potential tax liabilities.

How should you transfer your savings?

The St. James’s Place repatriation service looks at a client’s holdings collectively and considers the tax consequences of moving to another country.

For UK expats, it’s often advisable to restructure assets and reallocate savings across a combination of UK tax efficient investments such as ISA’s, Pensions, and Unit Trusts. Not only does this help mitigate the potential tax liabilities on any savings’ growth but also it takes advantage of the tax-efficient wrappers that are available.

As an example, we recently advised a client who had amassed considerable gains while living in China and were able to significantly reduce his potential tax charges as well as mitigate future tax liabilities on the gains made whilst living offshore. Without proper advice he would have found himself paying more tax to HMRC than was necessary.

But remember that removing one potential tax liability could create another elsewhere. That’s why it’s important to seek advice before you make your move and, ideally, to plan your return around the tax year.

Whether you’re an existing client or not, speak to Henman Wealth for advice without obligation to ensure you leave China in the best financial position possible. Email me at [email protected]

This article was also published on my website: https://sjpp.asia/henmanwealth/article2.html

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.