Careful Financial Planning Should Always Be a Concern, No Matter the Situation
When moving to a new country, paying careful attention to tax and economic issues is not just important, but vital both before and after you have left the UK. It is essential to make sure your money is working hard for you, and that assets, pensions, and general investments are earning the most residual income possible to carry you through to a secure financial future.
One of the best ways to ensure this is by hiring a financial adviser before you leave the UK. Here is a list of the many reasons why hiring a professional is an important step in safeguarding your future:
- Moving to Spain and leaving a property in the UK may have tax repercussions that you are not aware of without professional advice.
- Life insurance, savings, and general financial accounts held in the UK should be reviewed by a financial adviser to assure their applicability in Spain.
- Holding a UK pension account once you leave the UK can be tricky. As a non-resident, you are only permitted to contribute to a UK program for a short amount of time while still receiving tax benefits.
- Offshore accounts may be beneficial for those holding substantial balances of cash in the UK. Having an offshore account could help free up tax benefits allowed in the UK.
- Due to significant penalties and fees for late submissions, it’s important to understand that taxes may still be owed to the UK even after residence has been changed to Spain.
- Due to varying exchange rates, it’s crucial to keep on top of both income from investments and pension income based in the UK. The £ and € fluctuate on constantly. So, to avoid monthly surprises when receiving income, it’s important to be fully aware of how these fluctuations can affect you.
- There may be significant tax rebates coming your way after the move. Hiring a professional will assure that you receive all monies you are due. You must notify the HMRC of your departure so that any refunds may be properly received.
- National Insurance contributions may be allowed after you move outside of the UK which could mean state pension benefits for you in the long run.
- Once you have ended your residency in the UK, you can no longer contribute to ISAs.
- Accumulated pension rights in the UK can be a difficult trail to manipulate without a qualified professional to help navigate your benefits.
- The Statutory Residence Test may hold a great deal of significance for you if you choose to split your time between the UK and Spain. A specialist in this area can help you figure out what is best for you.
There are significant differences in taxation and inheritance laws in the UK and Spain. In order to protect yourself and generations that follow you, it is imperative that you consult a professional to ensure your estate is protected.
Consulting a currency exchange specialist may be of great help to you when leaving the UK. One of the biggest advantages of currency exchange services is you can lock in the current rate for up to a full year. This could help to stabilize any regular payments you receive from the UK and help to avoid fluctuations in payment amounts.
In general, what is the best way to maintain a financially secure lifestyle in Spain?
When thinking of moving your main residence to Spain, there are many costs and fees to consider in addition to the expense of the actual move. It would be remiss to only think of the larger concerns of taxes and real estate prices when, in fact, there are many other costs to take into account. Expenses to consider are:
- Community fees
- Local property taxes
- Local council taxes
- Medical fees
- Internet and phone connection
- Food and entertainment costs
Considering all of the costs associated with living abroad, it may be important to look at alternative forms of income. If you are not planning to live full-time in your Spanish home, you may consider renting it out to tourists. Keep in mind, however, that this is not a guarantee to turn over fast cash. Many seasoned renters find that breaking even and paying property maintenance is the norm, with only a small amount of money left over for personal use. Income earned from renting to holidaymakers is taxable, at between 19% and 25% of total income depending on your country of residence. There is also the consideration that not all properties will be granted a touristic license.
So be wise with your investments and consult a professional who can advise you on how to keep your money safe and your long-term goals in sight.
Read more of our 8 part Moving To Spain Guide: