Last week, we introduced you to two rugby players – Tommy Owens from the UK and Piet Smit from South Africa.
Both were offered international contracts – Tommy in South Africa and Piet in the UK.
The plans were designed around the intention to return home after a three-year stint playing abroad.
But life happens – and both have accepted a three-year extension to their contract.
Phil Billingham’s financial plan for Tommy Owens:
What an opportunity for Tommy and the family to be able to continue to enjoy the braai lifestyle for a little longer. Clearly South Africa has grown on them and things have gone well.
However, some relatively straightforward housekeeping in the UK will likely make this opportunity all the more enjoyable knowing steps have been taken to maintain his UK standings in readiness for their delayed return.
The first of these steps would be to ensure his lender knows his home will be let for longer than planned.
Letting a mortgaged property in the UK has to be on a ‘short let’ basis, which potentially means having to negotiate up to six more contracts, and the possibility of six different tenants, in his home before his return… not to mention the letting fees and management expenses needed for his home to be managed for him so he can have vacant possession in time for his return.
In addition to this, the mortgage lender would also need to be contacted, as they may want to change the mortgage from a residential mortgage onto a ‘buy to let’ basis – with the potential of an increase in the interest rate.
This would not need to be permanent and could be made residential again on his return, but there are likely to be fees applied to make this change to and subsequently from a ‘buy to let’ arrangement.
Life insurance providers would also need to be contacted to ensure they continue to provide the cover paid for whilst staying in South Africa.
It would also be worth completing a nattily titled HMRC’s ‘BR19’ so national insurance contribution records can be viewed and, if necessary, voluntary contributions made to maintain access to benefits and on track for a full UK State Pension
Any such NI contributions can’t be made immediately online and would have to be agreed with HMRC before any payments can be made, which can naturally take a few months to arrange… but saying this, you would probably be disappointed if HMRC dealt with such queries quickly!
Banking and savings
Tommy should also speak with his UK bank account provider, as this would need to be kept open and, it wouldn’t hurt for Tommy to move a little money into and out of this account to ensure this isn’t closed for him while he is away.
Trying to open a new UK bank account and work through anti-money laundering regulations, having had no UK address for a few years, can test even the most patient of person!
And finally, Tommy should ensure Parkinson’s second law doesn’t apply to him and that he is kind to his future self by saving some of his ‘too good to pass up’ offer from his club.
Now that what was going to be a relatively short visit has been extended, it’s going to be well worthwhile engaging with a local CFP accredited financial planner. We would recommend a fee only, independent firm who are used to working with people in similar positions, such as Veritas in Newlands in Cape Town
They will be able to ensure that Tommy and the family are able to enjoy his longer stay in South Africa, but help them save some of this additional income, in order to enable their transition back to the UK to be much smoother.
Especially as they may find the adjustment back to the cost of living in the UK an interesting one and the pleasure that is heating a house through a long cold and wet winter here in the UK!
Barry O’Mahony’s financial plan for Piet Smit:
Now that your Afrikaans hard-hitting tackles and no-nonsense attitude on the field have been recognised by the coaches and club owners in the UK, it is not surprising that they have given you a further extension.
They seem to have picked up on your genuine enthusiasm and warmth towards other players and staff, which has made you a popular character at the club.
Rugby people globally just love those traits, it distinguishes rugby people from many other sports people.
And well done on reducing your bond in SA over the past three years from the rental income.
The extension of your contract does not create major issues or the need for fundamental changes to your financial plan that we set up three years ago.
Your intention is still to return to South Africa with your family once the contract is over – your wife is missing her immediate family and the support they can give to her as a young mother, but she continues to soldier on.
Keep on top of tax
This lifestyle decision of where you will base yourself is critical to how we will continue to advise you.
Currently, and with your further contract extension in place, you will continue to be seen as a SA tax payer temporarily abroad by SARS, although you have been away for three years and you pay tax on your UK income to HMRC.
Don’t forget to keep on submitting your SA tax returns though!
Your affairs are now settling down in the UK, and even though you are planning to return to SA, we would advise you to continue building up your offshore assets while you are there on extended contract.
You and your family are now covered by the NHS and the club will fortunately also cover other sports injury treatments privately.
You fall under the disability policy with the English Players Association and you may also qualify for life cover.
You also automatically save into the UK state pension via your National Insurance contributions, which may become very useful when you eventually retire in SA.
We believe that you should contact our associate in the UK, World Citizens, to now start building up your asset base over there and make sure you are using all the possible retirement tax and savings incentives.
World Citizens is a global group of CFP Professionals, whose aim is to work together to assist clients who live and work across different tax jurisdictions, ensuring their financial affairs are well looked after.
When you speak to them you should cover the following issues:
- Do I now qualify for a bond in the UK and should I be looking to buy rather than rent for the next three years? As a South African, would this be a good investment?
- Am I saving tax effectively into my pension, and is this invested appropriately?
- Should I be starting to save into an ISA?
- Should I retain my life cover in SA or would it be cheaper to obtain life cover in the UK?