Old Mutual International, part of Quilter, commissioned a YouGov survey of 2,076 respondents (227 said they wanted to move abroad) from across the UK, to assess the financial affairs of those looking to move out of Britain permanently.
The survey also found 30% of respondents who plan to move overseas don’t think that they need to use a financial adviser at all.
However, advice is needed as many estates will remain liable for UK inheritance tax (IHT) because this is not based on an expatriate’s tax residency, nationality or citizenship; instead it revolves around the concept of their “domicile”.
Common law principle
Quilter said: “When someone moves abroad their tax residency generally depends on where they are actually living at the time, however domicile is broadly based on where their permanent or habitual home is and where they intend to live indefinitely.
“It is a common law principle, not defined by legislation, which can lead to an unexpected 40% tax liability before a loved one inherits.
“Whether a non-UK resident client still has UK domicile or not is only considered by HM Revenue & Customs (HMRC) after the person dies, which is determined by considering any continuing links the deceased has with the UK, their pattern of living and whether they intended to return.
“Due to the term domicile not being defined in UK tax legislation, there is no statutory test. Before 2009, you could ask HMRC for a provisional ruling but that is now unavailable.”
Another reason why potential expats may not be going to wealth planners was the cost to see one.
The survey found that 50% of respondents thought financial advisers were too expensive.
David Denton, technical expert at Old Mutual International said: “It’s worrying that so few people who plan to move abroad have sought out financial advice.
“Moving home is often considered to be one of the most stressful experiences in someone’s life let alone starting a life in a new country.
“Changing a UK domicile is an onerous and uncertain process.
“An experienced financial adviser will be able to help a client understand the challenges, but also help them prepare for the prospect of not having changed their domicile and implement other IHT mitigating strategies as a fail safe.”