THINKING OF RETIRING ABROAD?

CONSIDER THE FINANCIAL ASPECTS INCLUDING TAX ON PENSION INCOME

In recent years there have been an increasing number of people leaving the UK to retire abroad. What many fail to do is to take into consideration the financial aspects of the country of their choice. What I have done this month is to look at some of the most popular locations for retirement and to ask experts, ProACT Partnership to shed some light onto this rather complex but very important aspect of choosing a home for the rest of your life.

Cyprus

“Without a doubt, Cyprus has to be a serious contender when thinking of retiring to the sunshine”, says Sam Orgill, Managing Director at ProACT Partnership, www.proactpartnership.co.uk “This island in the Mediterranean offers the lowest tax on pension income than anywhere else in the world. The reason is that pension income is generally treated as earned income in the country of origin. Only by concession can you pay a lower rate by living as an expat abroad. These concessions are determined by double taxation treaties that vary from country to country and of course the tax you pay depends upon the country you choose to live in. Cyprus has some of the lowest tax rates in the world for expat pension income.

It is also important to review what tax at source you will pay on savings and investments and consider how you could hold these same investments without paying tax.

UK expats will be able to receive up to £15,000 GBP (Euro €19,500) pension before they start paying Cyprus income tax. Higher pensions are taxed at a maximum rate of 5%. Bank interest is a flat rate tax also at 10% while there is no capital gains tax on investments. Having lowered your tax bill you are left with more to spendable income”.

Other countries much favoured by UK citizens looking to move abroad include:-

Italy.

Pensions are taxed at 23% on the first 15,000 euros then 27% and up to 43%.

Savings are taxed at 12.5% minimum up to 27%

Malta

Pension tax starts at 15% over 7,572 euros and rises to 35% over 15,725 euros.

Savings rate at 15% at source.

Portugal

Pension’s tax starts at 10.5% up to 4,639 euros but rises to 34% over 17,403 euros and upwards to 42%.

Dubai

A country with a totally different approach, here there is no tax on pensions or savings but pensioners retain a UK liability.

Added Sam, “The above figures are just a basic understanding of what you need to consider if buying abroad to retire.

There are other important factors such as Capital gains, which can in some countries such as Portugal be avoided on long term investment and deferred on property sale if you buy again.

Then one should consider medical fees/benefits. EU member countries enable EU Health cards to work to provide A&E medical care in local NHS. After state retirement age full transfer of medical benefits allows treatment of chronic conditions and repeat prescriptions. Winter fuel allowance is another consideration – this ceases whilst living in Dubai.

Once retired, on a set income, all these aspects are of importance.

As a company we specialise in advising expatriates. We are able to offer impartial advice and free reviews of expatriate tax planning issues that can identify ways to reduce the tax you pay, increase your income and release value of tied up assets. We also offer a Will writing service to protect capital including inheritance tax, domicile and capital gains tax issues.”

We have touched briefly on this major subject but if you are looking to buy abroad then do take time to do your homework. Seek advice from a professional company with experience in the field.

Don’t forget – that this is a home not for a holiday but for life! Live life to the full by having the security and serenity of knowing that financially you are secure.

There is a whole new life out there – enjoy!

Sarah Somerset

SIXTYPLUSSURFERS 9

http://www.sixtyplusurfers.co.uk/homelovers.html 

ProACT Partnership offer professional expatriate advice to people living abroad
ProACT services include Tax Wills Immigration Visas Medical Property Investment Pensions Currency
ProACT offer free reviews and seminars in paphos cyprus and the UK
UK Legal Services provided by Gareth Fatchett UK Lawyer
UK & Cyprus Tax Accounting Sam Orgillwww.proactpartnership.com