Should Expats Keep A British Address?

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British boyExpats are about to lose their financial credit card lifeline as Barclaycard, the largest British provider closes 39,000 accounts because the card holders do not have a UK address.

But the implications of living abroad while having an address back in Britain can be more far reaching.

Here are six points to think about before leaving the UK:

Tax

If you have a crash pad in the UK where you can stay on visits back, then you need to consider if you are really non-resident for tax purposes.

HM Revenue & Customs (HMRC) regularly takes cases before tax tribunals arguing that expats have not broken their ties with the UK. If HMRC can establish you are not non-resident, then you are liable to pay taxes in Britain.

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The best way to deal with this is to rent out a property through a letting agent to evidence you cannot come back and move in whenever you like.

Before leaving the UK, speak to HMRC about filing a final tax return.

Bank accounts and loans

Like Barclaycard, most credit providers will only lend to British-based borrowers. This is often because UK courts have no jurisdiction over expats.

Most expats open an overseas account with a branch of UK-based banks or building societies in the Isle of Man, Gibraltar or the Channel Islands.

Health cover and life insurance

British policies only cover UK residents unless the terms and conditions are specific about cover offered for other countries. Relying on travel insurance as a medical standby is a trap many expats fall in as the insurer will not pay out on a claim for someone living permanently overseas.

Mortgages and property insurance

Lenders certainly want to know if a home is shifting from someone’s main residence to a rental property and will generally charge a higher interest rate on the loan.  Standard home insurance is voided for rental properties and claims for buy to let insurance may be turned down if the property is empty for more than 30 days at a time.

Investments

Many investments structured around tax breaks are not available to non-residents.

These would include pension contribution tax relief, tax-free growth on ISAs and tax breaks offered by the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trusts.

Wills and estate planning

Making a will is a legal minefield for expats. British wills are only enforceable in the UK, and for expats and even UK investors who may have property overseas, it is vital to take local advice to make sure estate planning provisions do not conflict in different countries.