Wealthy British families considering moving abroad to escape potential tax hikes in the autumn Budget have been warned of hidden pitfalls. Experts say becoming an expat is complex and hasty plans could backfire, with costs potentially outweighing savings on school fees or tax bills.
Russell Gous, editor-in-chief of TopMoneyCompare, highlighted currency risk when transferring large sums internationally. He advised using specialist currency transfer services instead of high street banks to avoid excessive costs. Families must also consider capital gains tax (CGT) on UK assets sold after leaving, which could be subject to higher rates if transactions complete after the Budget on October 30.
Retaining UK property for rental income may still incur UK tax, and selling later could trigger CGT. Expats may need to file self-assessment tax returns in the UK and declare income in their new country, potentially requiring two tax returns and advice. Pension withdrawals are also complex, with state pensions frozen at the leaving rate in countries like Australia, New Zealand, and South Africa, eroding value over time.
Joanna Newton, partner at Stowe Family Law, warned that dual tax residency complicates divorce, as tax havens like Monaco and Dubai do not guarantee equal division of assets. Inheritance rules also differ overseas. She urged seeking expert legal and financial advice both in the UK and abroad.
While the prospect of sunnier climes and lower taxes is tempting, experts stress the importance of careful planning. The great escape requires significant time and money to get right, and Brits should not quit the UK in a fit of pique without ensuring their sums add up.
