CORPORATE ADVICE/ EMBRACING LIFE AS AN EXPAT

― Setting up life as an expat in Singapore can be an exciting, if rather daunting, step. With a range of considerations and decisions to make – financial and otherwise – making a home here benefits from careful planning. Huw Wedlock Director of The Fry Group Singapore looks at some of the important steps to consider.

by The Fry Group

It’s clear that the financial challenges of moving to a new country can be unsettling. Recent research on those who are planning or have recently moved abroad notes the impact that complex financial admin can have on the early days of a move (source: Ipsos). Around half of those that took part in the research identified that juggling finances between two locations was a particular concern, with taxes a significant consideration for three in five of those responding.

Becoming an expat can offer enormous opportunities with a range of benefits; a better lifestyle and career prospects along with the chance to travel and experience a different culture. Ensuring your finances are well managed, and your tax obligations are met, means you can take advantage of your new expat status without unnecessary financial pressures.

So, what are the top financial issues which British expats in Singapore need to think about?

Local tax

When relocating to Singapore, one of the first adjustments to consider is the variance in local tax laws and systems. If you are moving from the UK, a significant change to adapt to will be the method of tax payment. In Singapore, taxes on earnings are generally paid as a lump sum on an annual basis or can be paid monthly in arrears, unlike in the UK where they are deducted from your salary on a PAYE basis. It is crucial to note that if you switch jobs within Singapore or leave the country entirely, you must settle all outstanding taxes. Additionally, if you hold any existing stock options or awards that have not yet been exercised or vested when you decide to leave Singapore, you may be required to pay tax on them as well.

Will you become non-UK tax resident?

If you are able to break UK tax residency, it will help to limit your UK tax liabilities. It is important to understand your limits for visiting the UK in order to maintain a non-UK tax residence status, and also your ongoing reporting requirements with HM Revenue. It may be necessary to be non-UK resident for more than five years to escape UK Capital Gains Tax on the sale of assets – apart from UK land and property –which will always be within the charge to UK tax no matter how long you have been an expat.

Cost of living

The cost of living and the types of expenses you will incur while living in Singapore are very likely to be different from the UK. Make sure you have understood what your monthly outgoings will be and ensure you have adequate medical insurance to meet you and your family’s needs.

UK property

Many British expats choose to keep a foothold in the UK by holding on to the family home, renting it out or buying a UK investment property whilst living overseas. Special rules apply if you’re a non-UK resident landlord or live abroad usually for more than six months and receive rental income. If you live overseas and let a property using an agent, they must follow the scheme and deduct basic rate tax from your rental income before they pass it on to you, unless they’ve permission from HMRC not to. You can offset this against your own UK tax bill at the end of the year by submitting a Self-Assessment Tax Return.

If you’re selling a UK property, you may face Capital Gains Tax. The rules around taxation of UK property can be complicated so it’s important to understand how they apply to you before making any decisions.

Pensions and retirement savings

If you’ve recently left the UK and have an existing defined contribution personal pension from when you were resident, you may be able to continue to contribute to it in the tax year in which you leave the UK, and for up to five tax years after. These contributions could be £3,600 gross each year, and in certain circumstances, if you have taxable employment income in the UK, you may be able to contribute higher amounts.

In most cases however, pension contributions are related to your UK earnings and therefore most expats will be unable to continue contributing to their UK pensions while living abroad. Therefore, it’s unlikely that you will be building pension assets as you would have in the UK. Some companies may offer some sort of alternative savings scheme, but this is usually a benefit rather than a legal requirement such as workplace pensions in the UK, and you won’t benefit from tax relief on contributions (which is a major benefit to UK pensions). As such, you need to be more proactive about building retirement savings yourself to plan for future years.

Estate matters

One of the most common points which is overlooked after a move overseas relates to your Estate plans. If you have a family, it’s important to check whether your existing Will covers the appointment of guardians to help navigate local laws in Singapore. Having this in place means, if the worst should happen, your family will be taken care of in line with your wishes. It’s also important to remember, that whilst your residence status may have changed, your domicile status has not. This means that all your global assets remain in scope of UK Inheritance Tax (IHT), so further planning will still be required to optimise your UK IHT position.

With adjustments to your financial plans

taken care of, you can enjoy spending time exploring all that Singapore has to offer – indulging in its multicultural society, vibrant food culture, ample green spaces, and the chance to explore the region, which might have been some of the motivating factors behind your decision to relocate to Singapore in the first place! So, getting your finances in order will afford you the freedom to embrace these exciting parts of expat life.

With eight offices around the world, including Singapore, many of our team have experienced a move overseas themselves and enjoyed time abroad as expats. Together with their knowledge and expertise covering a wide range of tax and financial matters, they can offer practical and informative advice during your time in Asia.

About Fry Group

Established in 1898 by Thomas Fry, The Fry Group carved out a business by helping British expatriates recover tax. Thomas passed away in 1910, leaving the business to his brother Wilfred. We continue to adopt the core business values and principles established by our founders over 120 years ago.

From eight offices across the world, our award winning team of experts help thousands of individuals with all aspects of tax, estate and financial planning – from the completion of UK annual Tax Returns and the setting up of a valid UK Will to dealing with complex tax mitigation structures and designing a range of investment portfolios.