This week our message is for all the women (ex-pats, common-law/same sex couples) who have "non-typical" financial concerns living here in the UK.
There's no doubt about it, navigating the tax landscape in the UK as an Expat, Non-Domiciled individual, or part of a Same-sex partnership is challenging. At different phases of life in the UK, the tax rules suddenly shift, making non-typical individuals more vulnerable to tax complexity. Understanding when these tax changes happen can help you plan ahead to be financially prudent, and NOT run afoul of the HMRC or its equivalent abroad.
This is one area were we STRONGLY recommend you don't just rely on word of mouth and SEEK PROFESSIONAL ADVICE. (Please. For your own sanity.)
Below are the key takeaways from London 2016 Forum breakout discussion on “Overcoming Financial & Legal Challenges for Non-typical Partners” led by Tor Flonaes of Maseco Private Wealth.
New UK tax changes make it harder to keep offshore money off the tax grid. For example, effective April 2017, HMRC will levy tax on your worldwide assets and your global income if you have been resident in the UK for more than 15 out of 20 years. With this new change, individuals are also exposed to inheritance tax on worldwide assets as opposed to just assets based in the UK. Be careful if only one spouse is domiciled and the other is not - special provision must be made for transfers between spouses to not bring about a tax charge.
Americans: Get a US/UK accountant who can take care of tax filings for both. Being an American abroad is especially complicated as the US mandates global taxation on citizens even when living abroad. Having someone who understands both the US and UK tax rules is critical for reliable advice before making financial transactions and considering the timing of US and UK tax years (e.g. you can potentially have favorable tax treatment filing gains in one country first, and then the other).
UK Common-Law Couples: Did you know?
- If you're married, WITHOUT children: whole estate passes to spouse outright
- If you're married, WITH children: spouse receives half of the estate, children receive remaining 50%
- If you're not legally married, WITH children: entire estate passes to children, surviving partner has no entitlement
Ultimately, ask around (including on our Facebook page) to find recommended professionals for advice if you are not sure of your domicile/tax situation. Sites such as VouchedFor and Unbiased can also be useful resources in beginning your search for the right specialist advisor(s).
(*NOTE: We have no relationship whatsoever with VouchedFor or Unbiased. They are simply mentioned here as a possible source of useful information.)
What are your thoughts? What advice can you share from your experiences preparing for your life's major financial moments? Please share your thoughts with us on Facebook here.