The investment options available for ex-pats typically differ from those living in the UK. For example, the Individual Savings Account (ISA) is a popular UK-based investment option that isn’t available to ex-pats. This is unfortunate because the ISA is largely viewed as one of the safest, most convenient, and most tax-efficient options for people looking to invest. What are your choices as an ex-pat then? Here is a guide to available investment opportunities for you.
Offshore investment bonds
Offshore bonds are a tax-efficient option since these aren’t subject to income and capital gains tax. Meaning, it will grow tax-free, which could lead to faster and bigger returns compared to onshore bonds. You pay a single lump sum to invest, and this amount depends on the provider.
However, when you bring the money from an offshore bond back into the UK, you’ll be subject to income tax, so before investing in offshore bonds, you may want to plan for the long-term. You can discuss the encashment with your financial adviser to maximize your profit.
QROPS and other private pensions
Your pensions can serve as a source of a steady income in your retirement years, and for ex-pats, a Qualifying Recognised Overseas Pension Scheme (QROPS) is fast becoming one of the preferred pension schemes. One of the reasons is that QROPS allows you to hold or withdraw your pension in a currency of your choosing, saving you from volatile exchange rates. Furthermore, UK pensions can only be transferred to your spouse when you die but QROPS allows for more flexibility with who can inherit your pension.
Relying only on your state pension may not be the best route since you can only claim it at 66. It’s better to diversify your pension plan to give you more retirement options. Visit www.pensionsforexpats.co.uk for more information.
Purchasing property is one of the ways you can diversify your investment portfolio. You can buy property in the UK or the country you’re based in. You can sell off your property once the value has appreciated enough or you can use it to gain passive income in the form of rent. However, there are a few things you need to consider before buying property in the UK.
As an ex-pat, it may be hard for you to manage the property and rent collection since you’re out of the country. You also need to file income tax on any rental income. In this case, you may need to hire a property management agency to deal with all this.
You also need to consider any tax filings or laws associated with owning property in your current country to determine if it’s more financially sound to buy property there or in the UK.
Understanding your investment options as an ex-pat can help you better plan your investment portfolio better. It can get complex with all the taxes and fees from cross-country transactions, but if you have a qualified financial adviser, you can make smarter decisions that could save you thousands in fees and taxes.