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Six essential money facts about moving abroad

Paul Lewis / 08 October 2014

Thinking of moving overseas? Some six million of us are planning to do just that. Paul Lewis examines the potential financial pitfalls of living abroad.

Property abroad
Moving permanently to another country can have big financial implications

The summer sun has made many people think how nice it would be if it were always like this. Breakfast on a sunny patio, strolls in the setting sunlight, and a warm climate.

It has been a dream for many, but selling up in later life and moving permanently to another country has big financial implications. 


The state pension can be paid to you anywhere in the world, but it is increased with inflation in only around 50 countries. They include the whole of the European Union and the USA but exclude Canada and Australia. 

In those ‘frozen’ countries the pension is paid forever at the rate at which it is first claimed there, but after 20 years or so, its value will be much diminished. 

Winter Fuel Payment can be claimed in the EU and four other European Economic Area (EEA) countries. But from winter 2015-16 it will not be paid in France, Spain, Portugal, Greece, Gibraltar, Malta or Cyprus.

Standard war pensions, including those for widows, are paid and uprated anywhere in the world, but extra amounts for the severely disabled are not. 

A private or company pension or an annuity can be paid anywhere in the world and will be increased as it would be in the UK. 

Read more about recent changes to the state pension.

How will pensions and benefits payments be made?

All these UK-based payments will continue to be made in sterling. Although some may be paid into a foreign bank account in the local currency, they will all be subject to fluctuations in the exchange rate of sterling. 

At the moment the pound is high – which is good news for those in the eurozone or the USA. When it falls, the payments will be worth less. 

No other state benefits are payable if you live outside the UK. You may be able to claim local benefits – especially in the EU. But to do that you will have to penetrate the local bureaucracy in the local language. That may be very difficult to do without the help of local ex-pats. 


If you live abroad you will normally have to pay tax on your income from anywhere in the world. That may include pensions and income from investments or savings based in the UK. Those incomes are in theory also taxable in the UK but double-taxation agreements normally mean the UK gives up its right to the tax as long as you are taxed abroad. 

Tell your pension provider or the holder of your investments or savings and that should mean the money is paid gross without tax deducted.

However, rent from lettings in the UK is always taxed here and the tax-free rent-a-room scheme does not apply if you live abroad. 

Some countries tax the proceeds of selling a home you live in: that would apply to a home in another country such as the UK. Others impose an annual wealth tax on your assets that will include any property in another country and may include the home you live in. There will also be local property taxes.

Inheritance and tax

Almost all countries now have a form of inheritance tax. Many will not provide an exemption for a spouse – so if you are married, the survivor may have to pay tax on your estate. 

Other rules will also be very different from those in the UK. You will need to ensure you have a will drawn up in the foreign jurisdiction if you are planning to die there. That can be complicated if you also have property in the UK. 

In some countries you will not be able to disinherit close family members. Always make clear to your heirs what they will have to do to sort things out when you die.

Somewhere to live

Buying property in another jurisdiction in a foreign language is fraught with difficulties. In many countries it may be difficult to establish exactly what title you are buying – and whether anyone else has any rights over the property you think you own. 

Local lawyers may be casual about such things – and it may be much harder to get compensation for poor but expensive advice.

You should always be very wary of buying new property, especially if it has not yet been built. It may never be, and even if it is, it may not be clear who is responsible for expenses and which local taxes and charges you will have to pay – or even if you will be allowed to live in a holiday resort all year round. 

In some cases it may not have the proper building consent, which could result in hefty fines or even demolition. 

Never buy property without seeing it first and don't rush into buying. Get your own independent lawyer – separate from the developer and the sale. Visit the house, examine it, check the local property market, and make sure that the current occupant really does live there. 

Check, too, that you will not be liable for the costs of infrastructure – drains or roads. Also, be wary if you are asked to pay a chunk of the price in cash so the seller can evade sales tax.

If you borrow money to buy the property your repayments will be in the local currency. If your income is in sterling that may affect your ability to meet them as the pound fluctuates. 

Lenders in other countries may be less well regulated than here – make sure that you understand how your repayments may change in future. If you do find you cannot meet your repayments, local laws on debt recovery will be different from – and may be harsher than – those in the UK.

Read our tips for buying property abroad.

Savings and investments

You can keep any savings and investments in the UK institutions if you move abroad. But once you give up your UK address it will be near impossible to open an account with a UK-based bank or building society.

Cutting all ties

If you are living abroad permanently, intend to die there, and have cut all ties with the UK, then you may have moved what is called your 'domicile' to that country. That means you will no longer be subject to UK laws or taxes but will be fully governed by local ones. It will also require permission from your adopted country, but in most of the EU, this should not be a problem. 


Check the local health service; you may find there is compulsory - or voluntary - insurance to pay for healthcare and that may not cover everything you need. 

Find out about public transport in the event of you or your partner losing the ability to drive. 

If you are a couple, remember that eventually one of you will be alone in the country. If you have moved away from family and friends, how easy will that be?

And finally, bear in mind that, however taken by a location you may be, a great place for a holiday is not always a good place to live.

This article first appeared in the October 2014 edition of Saga Magazine.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.